Even today, very few users seriously think about the protection level of their own funds. People don’t know much how to secure their savings, and therefore, choose the most elementary storage options. Such simple but short-sighted methods are just the most vulnerable to any kind of fraud. The working principle of all wallets designed for cryptocurrency storage divides them into two types — hot and cold.
A hot wallet is any type of the wallet connected to the Internet. For example, when creating an account on the cryptocurrency exchange and sending funds to it, you deposit in this hot wallet as a result. This type is fairly simple to set up and also allows you to get fast access to your personal balance.
Cold wallets are self-contained, not connected to the Internet, and use a physical storage medium for key storage — most often it is a regular flash drive. Thus, this type is the most secure option for safekeeping digital assets. This method is also called cold storage. It is perfect for long-term investments or “holders”.
Of course, both types have their pros and cons, but today we will talk in more detail about the cold one. This method of storing your digital savings is widely regarded as the safest. It is able to protect your cryptocurrencies even when being disconnected from the Internet.
Protecting assets outside a global network means minimizing the risk of data leakage to attackers. However, this method is not so convenient when compared to storage in online platforms. That's why users often keep a small amount of the digital assets on the Web for faster use. But the prefer the cold wallet for the most part. All its strong points can be placed in a single option — the maximum security of the cryptocurrencies.
Theoretically, there may be some difficulties related to the cold wallet. But the are indeed in a much smaller number than when using online services. It is more difficult for beginners to work with cold wallets. The perfect Evolution is to combine several types of wallets — hot and cold. The former is very convenient and can be quickly used, while the latter is incredibly secured.