#BtcNewHolder The distinguishing feature is the connection to the Internet. While hot wallets are connected to the Internet, Cold wallets are not connected to the Internet. hot wallets are therefore considered to be considerably less secure because hackers can gain access to the cryptocurrencies via the Internet connection. cold wallets doesn’t have this point of attack.

This is also the reason why large investment companies and cryptocurrency exchanges store a large part of their cryptocurrencies on cold wallets. You should take this as an example! In recent years, many crypto exchanges got hacked and Bitcoin and other coins have been stolen. Therefore a cold wallet definitely makes sense also for private customers, in the form of a hardware wallet or a paper wallet.

You should also know that hot wallets can be divided into three subcategories. These types have in common that the “Private Keys” are connected to the Internet. The distinction is made on the basis of the storage medium. The subcategories of hot wallets are: