The Best Hot and Cold Wallets to Secure Your Crypto Assets
Cryptocurrency exists as a natively digital entity that needs to be protected. That is why we have crypto wallets, which are software programs designed to store your crypto assets keys. These software programs being dubbed “wallets,” are somewhat confusing to new users. Crypto wallets don’t store cryptocurrency the same way pocket wallets store currency. They only store your private and public keys that help with transactions.
These keys are a unique set of letters and numbers that allow you to send and receive cryptocurrency.
Whereas public keys are open to the public and free to share them, private keys are a secret. The need for secrecy is simple, and private keys grant anyone who holds them full access to your assets. To keep private keys secure, two types of crypto wallets have emerged: hot and cold wallets.
All cryptocurrency wallets, which allow you to store the private keys, fall under these two categories. Let’s look at how they work to secure your crypto assets.
What Are Hot Wallets?
Hot wallets are software programs connected to the internet. They help facilitate any changes to the record of transactions on a blockchain quickly and conveniently. Therefore, these wallets are popular among investors who use their cryptocurrencies for underlying everyday transactions.
Hot wallets send and receive tokens through the internet keeping your assets liquid and accessible at any time. So if you’re interested in making purchases with your cryptocurrency, then this is the wallet for you.
However, being connected to the internet has significant security implications for your wallet. If a user isn’t careful, they could end up exposing their private keys to the internet or potentially get hacked. That’s not to say hot wallets are an unsafe way to store cryptocurrency. Compared to cold wallets, which are completely removed from the internet, hot wallets present more risk.
Here are some of the best hot wallets available on the market:
Electrum is a desktop wallet founded in 2011. This wallet is compatible with multiple operating platforms, such as Windows, Mac, and Linux. It solely focuses on supporting bitcoin. Ensuring the speed and efficiency of transactions remain high on the platform.
The wallet charges a default transaction fee of 0.2 mBTC as a flat rate for sending bitcoin. This fee is included in the number of bitcoins you want to send at any given time, issuing a warning if the transaction exceeds your wallet balance.
Exodus wallet is a software that lives on your desktop or as an app on your phone. This desktop-first wallet that can integrate with Trezor has an attractive user interface. Its features include turning your digital currency transactions into a portfolio with graphs and charts. The wallet supports more than 100 different digital assets and requires no account setup.
However, Exodus doesn’t offer two-factor authentication, and the private keys are stored on the computer or phone. So a secondary backup is necessary in case the device the software is on gets stolen or lost.
BRD has a clean and easy navigation interface that makes it one of the most popular Bitcoin and Ethereum wallets for iOS and Android. Therefore, BRD is appealing to beginners who want to store a small amount of cryptocurrency. The wallet supports bitcoin, ethereum, Ripple, BRD token, and Bcash.
It charges a small fee that is attached to every payment sent. This fee varies, and BRD uses its calculation system to come up with the amount. The wallet supports any valid Bitcoin transaction, regardless of its origins. The only prerequisite is that it’s broadcast on a network/coin that BRD supports.
What Are Cold Wallets?
Cold wallets generate and store your keys offline. With cold wallets, your assets are kept on a platform that is not connected to the internet—therefore protecting your cryptocurrency from network-based theft, hacking, and any other vulnerabilities associated with the internet. The transactions initiated online are transferred to an offline wallet and kept on devices such as a hard drive or USB.
The most basic type of cold wallet is a paper wallet. It is a document that has your private and public keys written on it. This type of wallet usually has an embedded QR code for scanning during transactions. However, its major drawback is that if the document gets lost or destroyed, the user can’t access their funds anymore. Furthermore, transferring to and from the cold wallet is more cumbersome than using a hot wallet for transactions.
Some of the best cold wallets include:
ELLIPAL is a user-friendly hardware wallet that looks like a touch screen phone. It has a 4-inch color screen and a 5 Megapixel camera. The hardware works with its respective mobile app to help keep it isolated from the outside world. That’s because it uses its camera to communicate with your phone by scanning QR codes.
An accompanying SD card you use to download the update is then inserted into the wallet to update the hardware’s firmware. Therefore at no point in time is the wallet ever connected to the internet. The wallet offers several ways of locking your device and ensuring maximum security. The hardware supports over 20 cryptocurrencies.
Bitcoin Paper Wallet
Paper wallets are a printed private key stored offline on a piece of paper with no risk of getting hacked unless someone steals it away from you. A bitcoin key generator doesn’t require any expertise and helps you print your keys. Sensitive information like private keys has a tamper-evident hologram sticker over it. The stickers alert the owner when someone tries to steal their keys.
N.B.: Paper wallets were very popular between 2011 and 2016, as there were very few options to store Bitcoin and other cryptocurrencies. Paper wallets are now considered obsolete and even dangerous to store your cryptocurrency on.
A Bitfi hardware wallet is easy to use a smartphone-like device that securely stores cryptocurrencies offline. It does not store any data. Instead, it acts as a generator that calculates the private key anytime you need to send funds. The private key is them promptly discarded until the next time you need it.
Bitcoin wallets are essential for anyone dealing with cryptocurrencies. Choosing the right wallet is dependent on several factors like the cost involved, level of security the wallet provides, and the ease-of-use. It’s not uncommon for investors to hold more than one type of wallet, a hot wallet for regular transactions and storing small amounts of crypto, and a cold wallet for long-term cryptocurrency storage more significant quantities. Each type of wallet has its strengths and weaknesses, so pick the one that suits your needs best.