Cold Wallet vs. Hot Wallet Differences

Digital currencies like Bitcoin are known to exist only as data within a “blockchain.” They therefore have no physical equivalent in the real world, as is the case with our real money, which we store in the form of coins or paper bills. This is exactly why the question arises as to where cryptocurrencies should actually be stored. After all, you don’t want hackers to get access to your account and loot your crypto account. “Wallets” are therefore the digital wallet. In this context, the term cold wallet comes up again and again as a particularly secure storage method.

Cold Wallet: What is it? Simply explained
When you buy Bitcoin or other cryptocurrencies from an exchange like Coinbase, they are stored in a so-called “wallet”. The wallet is therefore a kind of virtual wallet. However, it is not the “real” savings that are stored here, but the access keys for the currency. “Hot wallets” are based on software and they are available as app or desktop variants. The key point is that these types of wallets are connected to the Internet. The data is located on the servers of the respective exchange. They are therefore potentially insecure because hackers can gain access and steal the wallet key – similar to a “real” wallet that is pulled out of your pants pocket.

A cold wallet, in contrast, is a storage space that is not connected to the Internet. It is a “real” storage device that you can hold in your hand. The keys with which you can manage your digital money are stored offline. This, of course, significantly reduces the risk of DDos attacks and hacking – and this additional protection is certainly advisable. In the past few years, pretty much all crypto exchanges have been affected by hacker attacks, so such “cold storage” definitely makes sense.
As a rule, serious traders therefore store a large part of their virtual assets in a so-called “hardware” wallet. These are basically mini-computers that are specifically designed to store cryptocurrencies. Of course, these devices do not have an infinite lifespan either and can theoretically break down. However, they are currently among the most secure methods of storing virtual money, as they are virtually 100% protected against hacker attacks.
Currently, there are three major brands of hardware wallets:

Below we will briefly introduce you to the models so that you can decide for yourself which of these hardware wallets is right for you.

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