What Is the Difference between "Hot" and "Cold" Storage of Cryptocurrency? ▴ Learn

What Is the Difference between “Hot” and “Cold” Storage of Cryptocurrency?

"Hot storage" refers to keeping cryptocurrency private keys on a device or system that is connected to the internet, offering high accessibility but increased vulnerability to hacking. "Cold storage" refers to keeping private keys completely offline (e.g. on a hardware wallet or paper), offering maximum security but lower accessibility.

Exchanges use a combination, keeping minimal funds in hot storage for liquidity.

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