What is a cold wallet and a hot wallet? What is the difference between the two?

What is a cold wallet and a hot wallet? What is the difference between the two?
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Our cash is usually in the wallet. For digital assets such as Bitcoin, we also have our own wallet, which is a tool for storing digital currency.

The digital currency you buy is usually stored in two places: the exchange and the wallet. For beginners, it is more convenient to put them on the exchange. But for users with large assets, it will be more secure in the wallet. Bitcoin can be stored in a Bitcoin wallet, which stores your bitcoin information, including the bitcoin address (similar to your bank card account) and the private key (similar to your bank card's password). Similar to a physical wallet that can hold multiple bank cards, a bitcoin wallet can also store multiple bitcoin addresses, each corresponding to a separate private key. The Bitcoin private key is used to protect your wallet. If the private key is lost, your bitcoin will never be retrieved. Bitcoin wallets come in many forms.

According to the way of storing private keys, they can be divided into cold wallets and hot wallets. A cold wallet refers to a wallet where the Internet cannot access your private key, thus ensuring the security of digital assets. For example, computers that are not connected to the Internet, mobile phones, and small books with private key addresses. Cold wallets avoid the risk of hacking, but they also face the risk of being easily lost.

A hot wallet is a wallet that the Internet can access your private key. Hot wallets are often in the form of online wallets. When using a hot wallet, it is best to set different passwords on different platforms and enable secondary authentication to ensure your assets are safe.

What is the difference between these two types of wallets? 1. Security Cold wallets are less secure than hot wallets because they are not accessible by the network, thus avoiding the risk of hackers stealing private keys. 2. Convenience Because the hot wallet can be used for trading at any time in the networked state, the hot wallet will be more convenient and quicker for students who frequently trade.

For individual investors, if the assets are relatively large, it is recommended that the hot and cold wallets be used together, hot and cold, risk isolation, frequent trading with a hot wallet, and another with a cold wallet.