Cryptocurrency wallets: Hot vs. cold wallets and how they work
If you’re dipping your toe into cryptocurrency, you need a wallet. Similar to the physical wallet that holds your cash and cards, a crypto wallet holds your digital assets.
There are two main types of self-custody wallets: A hot wallet that’s web-based and connected to the internet and a cold wallet that’s a specialized piece of hardware.
Which one should you use? It depends. For most people, a web-based wallet is totally fine. If you have a lot of money or expensive NFTs to store, a hardware wallet is a smart idea.
Let’s take a closer look at some of the popular options.
Software-based (hot) wallets
When you buy cryptocurrency on an exchange like Coinbase, FTX or Crypto.com, a wallet is created for you — one that the exchange controls. This is called a custodial wallet. To move your crypto, buy things with it or stake it to earn money, you need to move to a self-custody wallet. That means you have complete control over the wallet and everything inside it.
Which one should you choose?
MetaMask
MetaMask is one of the most popular wallets on the most-used blockchain, Ethereum. It has all the features you need to buy, store, send and swap tokens.
You can access MetaMask as a browser extension you install and use directly from Chrome, Firefox, Brave or Edge. There’s also an app version available for iPhone and Android.
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