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What is Hot Wallet?

bitcoin

What is Hot Wallet?

When you talk about Hot Wallets for cryptocurrencies, reference is made to the storage space and management of cryptocurrencies that remain connected to the internet.

It is a wallet or wallet that can store cryptocurrencies, send and receive digital assets (among other types of operations). The main difference between cold wallets is that they do not require a permanent Internet connection.

Although each popular cryptocurrency wallet may have its peculiarities, there are a number of elements present in practically all online virtual wallets: Their operation normally requires an Internet connection and they maintain the main function in addition to storing cryptocurrencies, creating keys and passwords over the Internet.

Hot Wallet Features

Although each Cryptocurrency Hot Wallet may have its own peculiarities, there are a number of elements present in practically all online virtual wallets:

  • Its operation requires an Internet connection.
  • Create keys and passwords over the Internet.
  • Store data, keys and passwords on the server that hosts the wallet.

The main consequence of these features is that user data and funds are considered more exposed than cold wallets.

Eight tips if you want to buy a wallet for your cryptocurrencies | Vivus.es

Main uses of Hot Wallets

The use of Hot Wallets It is related to the speed of operations that allow. Accessing a hot wallet and starting a transaction is an operation that takes just a few seconds. By comparison, accessing cold wallets and transactions is a slower process.

Although Hot Wallets are considered less secure than Cold Wallets, it does not mean that they are not secure. Virtual wallets that remain connected to the Internet offer different layers of security for the protection of user data and assets.

It is true that there have been attacks on certain hot wallets. Although it is also true that cold storage devices run risks such as the loss, theft or forgetting of the seed that allows data recovery.

Why use a cryptocurrency hot wallet?

If investors decide to buy or sell digital currencies, they must decide where and how to store their tokens, that's where the hot wallets.

Although they are called “wallets”, the name is somewhat misleading, as these tools do not store cryptocurrency in the traditional way, but simply help record transactions on a decentralized ledger on the blockchain, regardless of the cryptocurrency used. Some are designed specifically for certain applications, or even just for certain cryptocurrencies.

The most popular wallets are quick to download, not only connect to a specific exchange, but also ensure constant control by investors with private keys that can access your assets.

Therefore, the use of hot walletsIt has to do with investors needing to be ready to trade as the market evolves, rather than relying on the slower process of loading hardware or foreign keys to trade.

Hot Wallets vs. Cold Wallets How are they different?

Differences between a Hot Wallet and a Cold Wallet

If you already know about the Hot Wallets and Cold Wallets, you may be wondering which one you should use and how they are different. It is important that you know that none is better than another. Both are good choices and have unique features and uses.

The most basic difference is that the Cold Wallet are not connected to the Internet, while the Hot Wallet if they are. However, both types allow users to store, send, and receive cryptocurrency.

Therefore, Cold Wallets are not connected to the Internet, which makes their use more complicated and difficult to access. However, since they are not connected to the Internet, they are also more secure and resistant to attacks.

Most used Hot Walletstoyes

These are some of the most popular Hot Wallets: 

  1. metamask
  2. TrustWallet
  3. Exodus
  4. Zengo
  5. coinomi
  6. electric

We recommend you read this other post about the free virtual credit card to also learn about this type of card to be able to take advantage of all its advantages!

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