The first question that arises when you decide to start dealing with crypto is where to store your coins. Well, first of all, you need to know that all coins without exceptions are stored in a respective blockchain. A coin is a code, a string of symbols registered in the blockchain. What you store are not the coins but access to them, your private keys. So, it is correct to talk about storing private keys to coins instead of storing coins. Private keys are stored in a cryptocurrency wallet. You can choose one from several crypto-wallet types.
Hot wallets are those wallets that are constantly connected to the internet. Usually, cryptocurrency exchanges offer the services of hot wallets:
- Such wallets are very convenient. You can access your funds whenever you need with a couple of clicks, just log into your account.
- A hot wallet is very easy to use. The interface is normally completely user-friendly, and everything is available within a couple of clicks.
- A hot wallet offered by an exchange usually supports all the coins supported by the platform.
Drawbacks? Hot wallets are usually custodial wallets. It means that not you keep your private keys but the exchange. This is one of the main drawbacks of such wallets and this is why the newest platforms such as crypto exchange platform LetsExchange do not offer custodial services. Another major concern is security. We know from experience that even the biggest exchange can be hacked, and thus, your funds might be stolen, too, if you keep them on the platform. So, for a safe Safemoon swap LetsExchange and similar platforms are better.
Here, you have a bigger choice. But first, let us check the main benefits and drawbacks of a cold wallet.
First of all, cold wallets are wallets that are not connected to the internet. It can be a device, a desktop app installed on a PC kept offline. Some exchanges store the funds of their clients in cold storage, too, which makes the service much safer than the service of the exchanges where funds are stored in hot wallets only.
The main benefit of a cold wallet is its safety. Usually, you connect such a wallet to the internet only if you need to exchange your coins. Other than that, the wallet is offline which is perfectly safe under the condition that you keep your system and the antivirus software updated.
There are drawbacks, too, even though they are not crucial. So, every time you need to swap coins you have to connect the wallet to the internet. It means some delays which is crucial if you are into day trading when every delay might be a significant loss of funds. Another drawback is that normally, a cold wallet is more complicated to use than a hot wallet. So, you need to know something about how to handle it and be very attentive when using it.
What wallet shall you choose? It depends on what aim you pursue. If you are willing to try yourself in day trading, a hot wallet is the best option. For long-term investment, a cold wallet is better.