In this article, I will briefly explain what Hot Wallets are and how they work.
What You Need to Know About Crypto Wallets
Any crypto asset you hold will be stored on a Blockchain. However, to access the crypto keys that allow you to manage and trade your assets, you need a crypto wallet.
These can be compared to some digital bank accounts for cryptocurrencies, but which can be accessed without intermediaries.
There are 2 types of wallets – hot and cold; the essential difference between them is that hot wallets are connected online, so to the Internet.
What Is a Hot Wallet?
This is a tool that allows cryptocurrency investors to store and trade tokens.
Because hot wallets are connected to the Internet, they tend to be somewhat more vulnerable to cyber-attacks and theft than cold wallets. At the same time, it is important to mention that they should not be considered unsafe.
Their main advantage is that they can be used to facilitate basic transactions and are easily used.
Types of Hot Wallets and How They Work
If an investor decides to buy/sell a digital currency, they must determine where and how to store their tokens.
Although they are called “wallets,” the name is somewhat misleading because those instruments do not actually store crypto in the traditional way. They only contribute to the recording of transactions in decentralized ledgers on Blockchain, for any cryptocurrency used.
Some are specially designed to be used in partnership with certain apps or even only with certain cryptocurrencies.
The most popular hot wallets can be downloaded quickly, are not only connected to specific exchanges, and ensure the investor’s constant control over a private key, which gives them access to the assets they own.
These instruments can be platforms that can be accessed online or in the form of software – desktop applications, mobile applications, etc.
5 Popular Hot Wallets
- Metamask
- Trust Wallet
- Myetherwallet
- Exodus
- Zengo