❄️ Cold Wallets vs 🔥 Hot Wallets and why you should have both!
Co-Founder at Wallet Guard
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)
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.
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)
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).
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
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
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.