HOT & COLD CRYPTO WALLETS: USE-CASES EXPLAINED

‍What is a Cold Wallet?

‍A simple answer is a Cold Wallet (Hardware Wallet) is a wallet that has never been connected to the internet. This is important because it ensures your seed phrase hasn’t had any exposure to the internet. (Never take a picture of the seed phrase)

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What is a Hot Wallet?

‍The easiest way to understand a hot wallet is to compare it to something like your MetaMask/Coinbase Wallet that you use to mint. Hot Wallets tend to be the wallets you have set up on your phone, web browser and desktop wallet.

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Hot Wallet Use Case:

‍A new NFT Project comes out. I would load up my hot wallet or burner wallet (@MetaMask) with ETH then proceed to their website to mint. After mint you would send the NFT from your hot wallet to your cold wallet (@Ledger)

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Why should you do this?

‍Imagine the situation where that NFT you minted had a malicious contract or you interacted with a malicious dApp that could steal your NFTs or Crypto.

Note:
The Cold Wallet & Hot Wallet combo allows you to be safer by keeping your assets safer in your cold wallet (Treat this like a vault).

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Pro & Cons of Hot Wallets:

‍Pros:
- Convenient
- Good for minting new projects
- Good for Degen plays (Risk)
Cons:
- If your seed phrase is compromised, the entire wallet is at risk
- Less effort involved to compromise a hot wallet

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Pro & Cons of Cold Wallets:

‍Pros:
- Better Safety (Makes hacker’s lives much harder)
- Seed Phrase & Private Key never leave hardware device
- Can be used as a vault
Cons:
- Less convenient
- Requires the device to be with you

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If this is your first time coming across Wallet Guard we offer a chrome extension designed to combat scams/phishing in Web3. Our extension acts as a security companion to your crypto wallet of choice.

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