If you own some cryptocurrency, you must keep it securely because online fraud is becoming a more common activity today. Therefore, it is better if you own a crypto wallet too. A wallet can keep your currencies safe. You know, cryptocurrencies are high-value digital assets; so, if you have some it means you have invested a lot of money. Therefore, just like you carry your cash or store the excess currency in a safe or bank, similarly, you must store your cryptocurrency in e-wallets like FBC Algo platform.
What Are Crypto Wallets?
Crypto wallets are online storage or a set of codes that allow you to save your private keys making them absolutely safe. With the help of this crypto wallet, you can send, receive, spend, or trade your cryptocurrency as you wish. You can even buy or sell it. It can only allow access to its owner which makes it very safe and secure tightly.
In reality, if you analyze crypto wallets, you will realize that they are your passwords to gain access to the network. Without your set of private keys, you are rendered into just nothing and you are not the rightful owner. But once these passwords are with you no one can prevent you from doing what you like with your cryptocurrencies. And crypto wallets are of various types.
Types of wallets and their importance:
Crypto wallets are of two types known as hot and cold wallets. Let’s know the features and importance of these two types of wallets-
What Are Hot Wallets?
Hot wallets are known as software wallets. It is a type of crypto wallet that is always connected to the internet. This feature, access to it is very easy. Thus, you are also always connected to the cryptocurrency network that you have attached to. Therefore, it is highly recommended for everyday usage.
However, it has a negative side too. Because of continuous and direct online connections, there could be a risk of fraud.
The Positive Factors of Hot Wallets
There are quite a few ups associated with hot wallets. They are:
- Since they are online wallets, they are always connected to the internet and therefore very easy to access and use. They can be used while on the go even with hands-on devices.
- They are convenient because they require no physical storage and no switching over from online to offline mode and vice versa.
- If a trader has a good portfolio and has a lot of tokens then this is the ideal thing for him as he can get a huge amount of storage capacity.
- Getting hold of such a wallet is extremely easy. They are free also and you can create them within minutes.
What Are Cold Wallets?
The other forms of crypto wallet are cold storage wallet. Here your private keys and ultimately your assets are stored offline. To transact you need to switch over to the online mode and then begin. You can then again shift back to the offline mode.
And with cold wallets, you have the option to choose between hardware wallets and paper wallets.
The Positives of Cold Wallets
They too have some positive factors like:
- They are deemed absolutely safe as they are offline and the hacker would need your access code physically to get a hold of your prize.
- They have an extra layer of security with pin protection encryption.
- The storage capacity of such wallets is extremely large.
- The majority of your assets can be stored here while you can use the hot one for daily transactions and store small quantities of your assets.
- You can have multiple backups of this wallet and store it in a safe place.
How To Decide on Your Wallet Type?
Now the choice becomes tough with all the pros and cons between hot wallet vs cold wallets. So, to decide on the best consider the following factors:
- The security that it can afford
- The convenience of operation and accessibility
- How many cryptocurrencies you can store
- The cost of setting up one
- The amount of loss protection they give you
The Bottom Line
These are the types of wallets and their importance. While buying one, your priority should always be the safety and security of your assets under all circumstances. When you are sure of these two factors you can easily choose between them.