Cryptocurrency storage is usually classified as hot or cold. Hot storage provides instant access via the Internet. This category includes wallets on crypto exchanges, specialized online services, mobile applications and desktop wallets.
It is important to note that a crypto wallet does not actually store cryptocurrency coins. The coins themselves remain in the blockchain and do not move anywhere. The role of the vault is to store the public and private keys needed to access and transact with coins.
Are hot wallets safe?
The group of cryptocurrency hot storages is quite diverse, and they vary greatly in their level of security. In any case, the choice is rich enough to find one or more of the most acceptable options for yourself.
The difference between the two largely depends on where the private keys are stored. Hot wallets are divided into custodial and non-custodial, depending on the location of the private keys.
In the case of custodial storages, private keys are located on the server of the company that owns the storage. Whereas in non-custodial wallets, the private keys reside on your device and you have full control over them.
It is important to remember that in the world of cryptocurrencies there is a principle: “Not your keys, not your crypto.” This means that unless you control the private keys, you do not have full control over your cryptocurrency assets. Services can be hacked, go bankrupt, limit transactions with your assets, and so on. If something like this happens, it won’t matter how much the USDT-ERC20 rate has changed.
This is why many users choose to store a significant portion of their cryptocurrency funds in a non-custodial manner, where they have full control over their private keys and therefore their assets.
Non-custodial storage is much safer. You manage your coins yourself, without fear of third party interference. But still, the security of your coins is directly related to the security of the device on which the software is installed.
There are no impenetrable fortresses; discovering a vulnerability is just a matter of time. But that doesn’t mean you have to give up the convenience of hot storage. This is a reminder to evaluate wallet security features and diversify how you store your capital. Experienced traders and investors often combine multiple storage methods for different purposes to provide the best combination of security and functionality.
Best hot wallets
When it comes to the best hot wallets, it is important to consider that many of them offer different versions with additional features. The basic functionality remains the same, but some versions may offer additional features such as staking, internal cryptocurrency exchange, or even buying crypto with fiat.
When choosing a hot storage, make sure it supports the cryptocurrencies you intend to handle and has the necessary features that suit your goals and needs.
Trust Wallet is a renowned online mobile cryptocurrency wallet and the official Binance app. Despite belonging to one of the leading crypto exchanges in the world, this wallet is non-custodial and can be used regardless of whether you have an account on the exchange. It supports over 40 blockchains, allowing you to store over 4.5 million different coins and tokens.
Trust Wallet is ideal for those interested in NFTs and decentralized applications. Inside the wallet there is a built-in Web3 browser that provides direct access to decentralized applications and games running on the blockchain.
Jaxx is a convenient online multi-currency cross-platform crypto wallet with an intuitive interface and built-in internal exchange function. It is available in desktop, mobile and browser versions, which provides flexibility in its use. Jaxx supports about 70 well-known and popular cryptocurrencies.
It should be noted that there is a fixed fee for conducting internal exchanges with Jaxx, and sometimes this is not profitable.
This wallet was developed in the ecosystem of the Coinbase cryptocurrency exchange and is available in the form of an application for both iOS and Android devices. All user funds are under insurance protection, and the insured amount fully covers their total cost. This is important because it means that in the event of confirmed incidents such as thefts or attacks, Coinbase Wallet customers will be reimbursed for all losses.
Exodus is available in desktop and mobile versions. It provides support for over 180 different cryptocurrencies and is considered one of the most convenient wallets available. It is freely available and suitable for both beginners and experienced professionals.
It is a reliable and well-secured crypto wallet with support for over 300 different coins and tokens. It has an internal asset exchange feature, although it should be noted that the fees for using this feature are slightly higher than when trading on a crypto exchange.