Cryptocurrency is one of the most traded assets in the world today. It is decentralized and can be traded freely without governmental control. Decentralization comes with many benefits in terms of investment. However, cryptocurrency has a weakness when it comes to security.
Cold wallet and Hot wallet are both known as a non-custodial wallets, meaning you have full control of the assets in the wallet and you are not dependent on a third party, like a crypto exchange (eg. Binance and Coinbase). You have full control of your private keys, making it possible to recover your assets anytime you want as long as you keep the private keys safe.
Non-custodial wallets come with a risk too. If you forget your password or lose your private keys, your assets are lost. However, if you stay organized and don't scumble to human errors, a cold wallet, and hot wallet can be the option for you.
Differences between Cold Wallet vs. Hot Wallet
The main difference between a "Hot" and a "Cold" wallet is that one is online and another is offline.
Hot wallets are online wallets, they are software or Apps that can be used on smartphones or computers. They are free to download and easy to use. Once downloaded, you can create your new account right away.
Cold wallets are offline wallets, they are devices that are designed specially to store cryptocurrency. Cold wallets can never be connected to any networks or other devices because they are made to block any sort of connection. Technologies like QR codes are adopted within cold wallets so that information can be transmitted to the blockchain without relying on wired or wireless connections.
The security level of a wallet is determined by how well it keeps the private keys safe. In the case of hot wallets, private keys are stored inside the smartphones which are very easy to hack. Smartphones are always online and can be easily targeted by remote hackers.
Cold wallets on the other hand store the private keys inside the specially made offline device. As the cold wallet stays offline at all times, there is no gateway for hackers to reach the private keys.
If you are a long-term investor who had already put a lot of money into crypto, it is very important to get a cold wallet to store your assets securely. If you are just starting or have not yet invested significantly in crypto, hot wallets might be more suitable for you because they are free to use and quick to get started on.
Cold Wallet vs. Hot Wallet - Popular Wallets
The cold wallet vs. hot wallet article will not be complete without giving our readers a few examples of the best cold wallets and hot wallets available in the market right now.
Hot Wallet:Trust Wallet:
Trust Wallet is a hot wallet that operates in partnership with the major exchange: Binance. It is available for free on the APP store and can be used on both Apple phones and Android phones.
Due to the partnership with Binance, the Trust wallet has a function to buy, sell, and trade crypto directly from the wallet. For investors that like to trade often, the Trust wallet can be a good choice.
The Trust wallet doesn’t have a browser extension but it allows users to interact with decentralized applications (DAPPs) through its mobile APP.
The Trust wallet's specialty is that it is fully open-source. Any coders can go over the Trust wallet's code to make sure that it is secure and void of any malicious codes.
Atomic Wallet is also another very popular hot wallet APP that can be downloaded for free from the APP store. It provides options for users to buy, exchange, and stake directly from the wallet.
One feature that distinguishes Atomic Wallet from its competitors is that there is a paid membership available. The membership allows you to earn rewards when you transact using the Atomic wallet. This is suitable for users who transact often and with big amounts.
The Atomic wallet does not offer a browser extension. This gives it limitations when it comes to accessing DAPPs on the Atomic wallet.
ELLIPAL Titan Mini:
ELLIPAL is one of the leading companies in the world for making secure air-gapped cold wallets and ELLIPAL Titan Mini is one of their newest product. Made entirely out of metal and a large touch screen, the ELLIPAL Titan Mini is a small, yet very sturdy, and easy-to-use cold wallet.
The ELLIPAL Titan Mini does not have a single USD port or wireless elements installed on the device. It works by transmitting blockchain information through QR codes, which makes it 100% offline at all times.
It must be used together with the ELLIPAL Mobile APP which allows it to transact securely and easily. The APP also allows buying, trading, investing, or crypto, and also access to DAPPs.
What makes the ELLIPAL Titan Mini unique is that it has anti-tamper functions which can help protect your assets against physical attacks. When the device detects a physical breach, it will automatically delete every data and makes the device unusable. This makes sure that your private keys will be protected and not stolen.