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In this article, I will be explaining the two types of cryptocurrency wallets- Hot and Cold Wallets.
But first, let’s explain what crypto wallets are.
What are Crypto Wallets?
A cryptocurrency wallet is an app, program or device that allows you to store your cryptocurrency safely.
According to Wikipedia, a simple crypto wallet contains pairs of public and private cryptographic keys. The keys can be used to track ownership, receive or spend cryptocurrencies.
You can also use crypto wallets to send, receive and spend cryptocurrency.
Why Should You Own a Crypto Wallet?
Some questions you might have are; Are crypto wallets necessary, and why should I own one?
There are two options when it comes to storing crypto when you purchase it, you can either leave it in the wallet of the app/platform you bought it or you can send it to your own crypto wallet.
If you leave it in the crypto exchange wallet, it’s basically still a crypto wallet. It’s known as a custodial wallet because a third party has custody of your crypto funds.
It is not a do-or-die affair to get a crypto wallet, some people prefer leaving their crypto in their crypto exchange wallet. It can be perfectly safe there, as long as you safeguard private information like passwords.
But, it is also advisable to own a crypto wallet, especially if you own a large amount of crypto.
Types of Crypto Wallets: Hot and Cold Wallets
Now that we’ve talked about what crypto wallets are, let’s dive into the types; Hot and Cold Wallets.
This type of wallet is a cryptocurrency wallet accessible online. They are connected to the internet and cryptocurrency networks, and are used to send and receive cryptocurrency, and also view your availability token balance.
They are linked with public and private keys that help facilitate transactions and act as security measures.
This is basically the opposite of the hot wallet. Crypto cold wallets are wallets with offline storage.
With cold wallets, your crypto is stored on a platform that isn’t connected to the internet.
The most common type of cold wallet is a hardware wallet, which is a small device that connects to a computer.
Cold Wallet vs. Hot Wallet
We’ll be doing a side-by-side comparison of the two wallets based on factors such as; Security, Convenience and Cost.
- Security: With earlier information, you might’ve guessed that Cold wallets are more secure since they’re offline while Hot wallets have a high-risk possibility of being hacked.
- Convenience: When it comes to this, Hot wallets take the win. They’re more convenient when it comes to sending and receiving crypto coins.
- Cost: Most hot wallets you come across come at no cost, they are mostly free. Whereas Cold wallets such as Hardware wallets, come at a cost of between $50 to $150.
If I am to recommend the best crypto Bitcoin wallet in Nigeria 2022, check out BREET.
Breet is an OTC crypto trading app that allows users to receive crypto, convert it to cash and withdraw it to their local bank account within minutes.
Breet is perfect for the ideal user to simply want to sell crypto in Africa and convert it to cash without worrying about cryptocurrency volatility.
Breet is 100% free as it has no deposit fee, withdrawal fee or any other hidden fees and it has no withdrawal limit. Their customer service is available 24/7 at email@example.com and calls/WhatsApp 08090569499
It supports cryptocurrencies such as; Bitcoin, Ethereum, Dogecoin, Litecoin and Bitcoin Cash.
It is available in both Nigeria and Ghana at the moment.
I cannot tell you to pick one over another because they both have their advantages, disadvantages and edges over another.
To choose the best wallet for you, do more research and weigh your options and pick which one would work the best for you in terms of security, convenience, cost and other factors.