Wallets: hot vs cold
A wallet does not actually hold coins. It holds the keys that let you move them on the blockchain. What matters is where those keys live.
Hot wallets
A hot wallet is an app on your phone or computer. It is connected to the internet, quick and free to set up, and handy for small amounts you plan to spend. Because it is online, a hacked device or malware can put it at risk. Think of it like the cash in your pocket.
Cold wallets
A cold wallet keeps the keys offline, usually on a small hardware device. You confirm each payment on the device itself, so even an infected computer cannot sign a transaction without you. Think of it like a safe at home. It is the usual choice for savings. The device can be replaced. The seed phrase is what matters. Buy hardware direct from the maker, never second hand.
Exchange accounts
Coins left on an exchange are not in your wallet at all. The exchange holds the keys and you hold an IOU. That is fine for buying, but not for keeping.
A common setup is a hot wallet for spending plus a hardware wallet for savings. Official wallet sites are listed on the resources page, and the full setup steps are in Hold your own keys.
Are Hardware Wallets Secure Enough?
aantonopHow to pick a setup that matches your skill level.
Key takeaways
- A wallet holds keys, not coins.
- Hot wallets suit small spending amounts. Cold wallets suit savings.
- Coins on an exchange are held by the exchange, not by you.
Not financial advice. These lessons are general education only. Bitcoin prices can swing hard. Never put in more than you can afford to lose, and do your own research.