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What is the difference between crypto cold storage wallets like ledger and online hot storage wallets

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Ledger Cold Storage Wallet

With recent news about crypto related companies and exchanges having financial issues and stopping withdrawals of funds, some crypto holders look to cold storage wallets like ledger to put them in control of their crypto and its safety.

When an individual purchases crypto from an exchange, in most cases (depending upon exchange) the default wallet will be an online wallet controlled by that exchange. The investor or holder can then decide to leave the crypto on their exchange’s online wallet or move it to their own digital wallet. There are 2 main types of digital crypto wallets and they can be described as “hot wallets” or “cold wallets”.

What is the difference between crypto cold storage and hot storage (Crypto cold vs hot wallets)?

The key differentiator between a hot wallet and a cold wallet is that a hot wallet is connected to the internet and a cold wallet is not.

When an individual purchases crypto and you want to store it yourself, you have to choose between holding your cryptocurrency in a “hot wallet”, a “cold wallet”, or using a combination of the two. A hot wallet offers a more convenient and faster access to the wallet, however it could be vulnerable to online attacks, which could lead to theft of your crypto. A cold wallet, like a ledger is typically not connected to the internet, so while it may be more secure, it’s less convenient.

How does a crypto wallet work?

A crypto wallet allows its owner to hold and store crypto funds. A crypto wallet is comprised of the public key and the private key. Both of these keys are required to perform and complete crypto transactions (buying, selling, and transferring).

A public key is how you send and receive money to your account, it is like a bank account number. The public key can also be called your “wallet address.” Your private key is like your bank password, and how you access your account to move around or do other things with your crypto. While you can keep these keys on a piece of paper, it’s very important to keep them safe and secure. If you lose your key, you could lose access to all of the crypto funds in your account or wallet.

Should I use a cold storage wallet or a hot wallet?

There are pros and cons to both cold wallets and hot wallets. We have listed several of them below to help you with this decision

Hot Wallet Pros

Hot Wallet Cons

Cold Wallet Pros

Cold Wallet Cons

Ledger Nano S crypto wallet

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