If you ever held a cryptocurrency, one of your biggest fears is how to store and secure them. In this case, you begin considering the different cryptocurrency wallets. While there are other varieties of crypto wallets, the general categories are -hot wallets and cold wallets.
By the way, what are digital or crypto currencies? Let’s start by distinguishing between the aforementioned. The former refers to electronic currencies in general while the later are encrypted and cryptographically designed digital currencies. Examples are Bitcoin, Ethereum, Monero, Dash, etc. Specifically, all cryptocurrencies, unlike the conventional electronic currencies, exist and are immurabily recorded on the native blockchain. Contrary to gold, paper money, etc, cryptocurrencies are stored in blockchain enabled wallets. Every wallet provides you with a public/private key. Therefore, anyone who knows them can compromise or steal your coin. Concurrently, you need a secure wallet.
For better understanding, it is fair to have a basic understanding of wallets in general and specifically the two broad varieties – cold and hot wallets.
You may want to know what a crypto wallet is.
Well, it is a safe place that houses your public /private keys or passwords. According to Wikipedia, a crypto wallet is either a hardware or software where you can store the public and/or private keys. Besides storing keys, it goes beyond encrypting and/or signing information. Therefore, the security of your cryptocurrency wallet determines how exposed or secured your keys are. In other words, your crypto assets are secure if your private keys are. Hence, the mantra: not your keys, not your coin.
Consequently, if you’re serious about not losing your coin, endeavor to get a good and secure wallet. However, it may cost you some bucks, depending on the types of wallets -cold or hot wallets.
Now you’re conversant with what a crypto wallet is, get to discover why you need a special design of the wallet. It is for your best advantage to go for a cold wallet if you have special concerns about your coin. However, both, hot and cold are good options, but with different needs and preferences. Before going forward, don’t judge the pot by the cover: don’t define the wallet using temperature as their names imply.
A hot wallet is a digitalized or software kind of wallet that stores and encrypts your keys. On the other hand, cold wallets are the hardware counterpart of the other. Therefore, while you require an internet connection to access the hot wallet, you don’t need such a cold wallet.
Currently, there are many numbers of hot wallets out there while there are only a few cold wallets available. Such wallets as Trust, Coinomi, Blockchain, and many others are cold wallets. Cold wallets for example BC-Vault, KeepKey, CoolWallet, Ledger Nano S, Trezor among other few places your keys on your hands.
Why do you need a cold wallet!
If your wallet is in the hands of a third party, there is a likeness that you may lose your coin someday. However, that may happen because the third party is open to bugs and as such prime targets. Concurrently, placing your keys on your hand is your best way to secure your crypto.
The need for cold wallets can not be emphasized, therefore, below are a few reasons why you need it;
- It covers a higher percentage of the unbanked.
- You don’t need the internet.
- Protected against malware even if you connect to exchanges.
Conclusively, it is your choice to either risk your assets or pay a few bucks to secure them as long as you want. With wallets like BC-Vault, you simply take some rest from the burnt of hacks once you have one.