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When dealing with money, you want to make sure it is secure and you are using a trusted system. This can all be confusing when trying to understand cryptocurrency and the best, most secure way to store it.
If you are new to cryptocurrency or simply trying to understand what this new craze is about, you should have heard of a wallet.
Hot wallet vs Cold wallet
The main difference between the two is that a hot wallet is connected to the internet and a cold wallet is not, it is stored offline. The hot wallet is like a bank, where the funds are a lot easier to access compared to a cold wallet, which you can think of as cash that’s probably under your mattress. Both these wallets have pros and cons and remember, you don’t need to store all your digital currency in a particular wallet. You can have some in the hot wallet and some in the cold wallet to alleviate risk, it’s like having some money in your bank account and some cash in your pocket.
Now let’s take a look a closer look at both wallets.
Cold wallets maintain a high level of security because they are stored offline. They are not accessible through the internet, therefore making it the most secure way to store your digital currency. PCCEX cares about the security of their platform and their clients and uses cold wallets to secure client information.
There also are different types of cold wallets – paper wallets or hardware wallets. Paper wallets are exactly what the name indicates, your information such as your private keys and public address are stored on a sheet of paper. Hardware wallets are external devices, something like a USB stick which are called Ledger Nanos or Trezors. When you do a transaction with a hardware wallet, you have to press a button to complete every transaction so its difficult for hackers to hack. The access to hardware wallets are locked with a pin number or a password. In simplest terms,
Hot wallets are more common and you hear about them more often, because there are many on the market. They are easily downloaded to a phone or desktop. Hot wallets are connected to the internet and are considered less secure to cold wallets due to the fact that they stay online and are open to hackers. This doesn’t mean that hot wallets are not secure as there is the latest tech security protecting them, it’s just cold wallets are more secure because they stay offline.
Most cryptocurrency platforms use both hot and cold wallets. PCCEX uses a certain amount of hot wallets but to secure client data we use cold wallets.