Hi guys, was wanting to see if anyone could tell me the difference between these and what the pros and cons are of each? Im wanting to withdraw crypto from kraken but I need an address to send it to and so on. Any insight would be helpful and any personal experiences. Thanks!
Differnce between hot wallet and cold wallets
byu/Zestyclose-Pick5354 inBitcoin
Posted by Zestyclose-Pick5354
6 Comments
Cold wallet is completely cut off the Internet. The seed phrase only ever existed encrypted on your cold wallet and in your head or on whatever medium you wrote it down. Preferably also offline, maybe a steel plate. As such it’s completely safe from a number of attacks that could affect hot wallets. Those are apps, programs etc that you use on your device but you at least once typed the seed phrase with your keyboard and it’s online. Your os might take screenshots at the wrong moment etc.
If it’s an amount that’s important to you get a hardware wallet like bitbox (BTC only).
You already have a wallet on Kraken. If this is a small amount that you want to trade/use, then a hot wallet is convenient. If this is a large sum that you want to keep/secure, buy a cold wallet and keep your key away from the internet.
**hot wallet** is connected to the internet, so it has the advantages to be fast and convenient as you can trade directly, but as it’s connected to internet , it can be hacked by malware, or by connecting it to a sketchy website.
**cold wallet** keeps private keys offline, so it’s safer because it protects better against online attacks, but it’s less convenient if you want to trade often.
In other words, a hot wallet is like cash in your pockets, money is ready to spend, and easy to use, but somebody can steal it easier while a cold wallet is like a safe, harder to access but far safer.
RULE #1: DO NOT READ OR REPLY TO DM’S. Anyone who tries to help in private is a scammer.
Hot wallets might offer more features for more assets but present more points of failure from the direct exposure to your browser. Mistakenly clicking the wrong link can grant a malicious agent access to drain your wallet. Can be useful for some defi applications and such but just be very careful when using hot wallets.
Cold wallets are essentially just a physical signing device connected to an offline wallet app. Basically no points of failure as long as you can responsibly custody your seed phrase. My personal recommendation over a hot wallet.
Many hot wallets are also capable of supporting cold wallets. Such as Nunchuk and Blue wallet. Also understand your Bitcoin is not stored in your wallet.