One picture to understand: What is a cold wallet, and how does it protect our asset security?
What is a cold wallet?
A "Cold Wallet" is a hardware device used for storing cryptocurrency, characterized by keeping private keys offline and disconnected from the network.
Cold wallets are generally not directly connected to the internet, providing higher security and preventing risks from network attacks, malicious software, or hacker intrusions.
Cold wallets typically resemble USB flash drives, credit cards, or even a piece of paper. When a transaction needs to be made, users can connect the cold wallet to the network to sign the transaction, and then disconnect it again to ensure the security of the private keys.
Users of cold wallets have complete control over their private keys and can access their cryptocurrency assets whenever needed. The most common cold wallets currently include Ledger and others.
What is a hot wallet?
A "Hot Wallet" refers to wallets that store and manage cryptocurrency on devices connected to the internet.
Hot wallets are typically software wallets or wallets on exchange platforms. In contrast to cold wallets, hot wallets are connected to the network, allowing users to quickly conduct digital asset transactions at any time.
Hot wallets typically exist in the form of apps, browser extensions, and other software. The most common hot wallets currently include MetaMask and others.
If virtual currency is compared to cash, a cold wallet is similar to a safe where we store cash at home, while a hot wallet is like a passbook given to us by the bank after we deposit cash.