There are two main types of crypto wallets: hot and cold. Hot wallets are connected to the internet. These include:

• Online wallets. These wallets connect to other websites/online services. For example, many crypto exchanges offer online wallets through their platforms.
• Mobile wallets. Mobile wallets can be downloaded to your mobile device. You then store your keys on the mobile app.
• Desktop wallets. With a desktop wallet, you download a program to your computer, which you then use to store your keys.

Cold wallets are wallets that are not connected to the internet. For example, you could buy a USB key that stores your keys. You could also print off your private keys on a piece of paper.

In addition, crypto wallets can either be custodial or noncustodial. A custodial wallet is one where a third party controls and manages the wallet, including security, on your behalf. An online wallet from a crypto exchange would be custodial.

A noncustodial wallet is one where the cryptocurrency owner manages the wallet. A USB hard drive or a paper wallet would be noncustodial. You’re responsible for storing and protecting your keys on a noncustodial wallet.

What Is a Hot Wallet?

A hot wallet is a type of crypto wallet that is connected to the internet and used for storing cryptocurrency or other digital assets that are actively traded or accessed frequently.

This type of wallet is designed for convenience and ease of use, allowing users to quickly and easily send and receive funds without having to go through a lengthy process of transferring funds from a cold storage wallet.

Since hot wallets are connected to the internet, they are more vulnerable to hacking and other security risks compared to cold wallets, which are offline and therefore more secure. As such, it is important to take precautions to secure a hot wallet, such as using strong passwords and two-factor authentication, and not keeping large amounts of cryptocurrency in it for extended periods of time.

What’s a Cold Wallet?

A cold wallet is a type of crypto wallet used to store cryptocurrencies offline. This is done to enhance security by reducing the risk of hacking, malware and other security threats that come with being connected to the internet.

Cold wallets are either hardware devices like USB sticks or paper wallets that store private and public keys to your crypto via non-electronic means. Either way, your private keys are kept completely offline and secure from any online threats.

While cold wallets offer a high level of security, they are less convenient to use for regular transactions than hot wallets. Cold wallets are ideal for storing large amounts of cryptocurrency for extended periods.

It is important to note that users must take adequate precautions when setting up and using a cold wallet to ensure that they do not lose their private keys and are able to recover their cryptocurrency in the event of a loss or damage to their hardware device.