Explain the Difference between a ‘Hot Wallet’ and a ‘Cold Wallet’.
A 'hot wallet' is a cryptocurrency wallet that is connected to the internet, such as a mobile app or desktop wallet. It offers convenience for frequent transactions but is more vulnerable to online attacks.
A 'cold wallet' (or cold storage) is an offline wallet, like a hardware device or a paper wallet, that is never connected to the internet. Cold wallets offer superior security against online theft and are typically used to store large amounts of funds.
Glossar
Hot Wallet
Storage ⎊ A hot wallet is a cryptocurrency storage solution where the private keys are created, stored, and managed on a device or server connected to the internet.
Hardware Wallet
Security ⎊ Hardware Wallet is a physical electronic device designed to securely store a user's private keys offline, requiring physical confirmation for transaction authorization, thus providing the highest level of defense against remote digital theft.
Multisig Wallet
Security ⎊ Multisig wallets represent a cryptographic advancement in digital asset custody, demanding multiple private key authorizations to execute a transaction, mitigating single points of failure inherent in traditional single-signature schemes.
Cryptocurrency Wallet
Asset Access Point ⎊ A Cryptocurrency Wallet is a software or hardware interface that securely stores the private keys necessary to access and manage digital assets held on a blockchain network, enabling the authorization of transactions.