Educational Byte: Cold vs. Hot Crypto Wallets - and More Wallet Types

Hot wallets are connected to the Internet, while cold wallets stay offline. Hot wallets are more exposed to hacks, phishing, and malware. Cold wallets offer higher security for long-term holding.

There are plenty of crypto wallets around, and it could be difficult to select one for its features, instead of randomly. You should consider some important knowledge first, though: wallets can be custodial and non-custodial, cold or hot. Hot wallets are connected to the Internet, while cold wallets stay offline. Now, when it comes to custodial vs. non-custodial, the difference is about who controls the private keys. Custodial wallets are managed by a third party, while non-custodial wallets give you full control.

These concepts can be confusing sometimes. Someone could tell you that cold wallets are non-custodial, and that they mostly are, but the categories aren’t the same thing. Custodial and non-custodial can be ...