Crypto currency wallets – Hot vs. Cold
Bitcoins are stored in a software application called crypto currency wallets and they are categorized into hot and cold wallets based on the way it operates. There are numerous wallets out there and you have to select the best blockchain wallet that is highly resistant to hackers.
Hot wallet is something that is connected to the internet and they are easy to set up and they are convenient for traders and other users, as one can access bit coins faster in this type.
Whereas, on the other side, a cold wallet does not require internet connection to transact bitcoins. But this type of wallets uses a physical medium in order to store keys offline and thus it is free from internet hackers who hack their bit coins over web. Therefore, these cold wallets are an extremely safe alternative to store your digital money.
Software wallets are nothing but hot wallets and they come in various types namely web, desktop, and mobile wallets and moreover, each of the type has its own characteristics.
Another type is Hardware wallets which are physical and electronic devices and they generate public and private keys using a random number generator (RNG). Since these keys are not stored in the web, this type is a cold wallet.
Last but not least paper wallet is a piece of paper on which both public and private keys are printed in the form of QR codes. When one wishes to transact bitcoins, then he has to scan the code and it is considered as an alternative to cold storage wallets.