Explain the Difference between ‘Hot Wallet’ and ‘Cold Wallet’ Custody.
Hot wallet custody involves storing private keys on a device connected to the internet, allowing for quick access and transaction execution. It is highly convenient but carries a higher risk of online hacking.
Cold wallet custody stores private keys on an air-gapped, offline device. It is much more secure against cyber-theft but requires a more complex, multi-step process for transactions, making it suitable for large, long-term holdings.
Glossar
Cold Wallet Custody
Custody ⎊ Within the convergence of cryptocurrency, options trading, and financial derivatives, cold wallet custody represents a distinct paradigm shift in asset safeguarding, particularly relevant given increasing scrutiny around sustainability and responsible digital finance.
Wallet Custody
Control ⎊ Wallet custody defines the operational control over the private keys that authorize the spending of cryptocurrency assets and collateral for derivatives positions.
Cold Storage
Security ⎊ Cold storage, within cryptocurrency and derivatives, represents an offline method for safeguarding private keys, mitigating exposure to online threats like exchange hacks or malware.
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.