Choosing which crypto wallet is best for you will depend on how secure you want your assets to be and how much trading you intend to do.
People who invest large amounts of money will likely opt for a cold wallet as it’s more secure, while people who dabble in investing will likely be fine not spending the extra money and using a hot wallet.
Security
When it comes to cryptocurrency, security is perhaps the most important thing to consider. You want your digital assets to be as safe as possible from hackers and fraudsters. The best defense from a hacker is going offline, so a cold wallet will be the most secure route to take. Being a physical object, cold wallets can still be lost or stolen, so it’s important to store your cold wallet securely.
If you do lose your wallet, you can still access your crypto by using your seed phrase. Seed phrases are randomly generated combinations of words that can be used to recover or access your account in the instance you don’t have your cold wallet or your hot wallet becomes disconnected. You’re assigned a seed phrase, or recovery phrase, upon setting up your wallet.
Fees
While transactions on the blockchain may come with fees, hot wallets like Exodus are typically free to use, while the cold wallets on this list cost up to $149.
Ease of use
Hot wallets are typically easier to use than cold wallets, simply because you don’t need to take an extra step to access them.
Hot wallets are connected to your browser via an extension to your phone if you’re using a mobile wallet or via software downloaded to your computer. They can be accessed at any time, while cold wallets require a physical dongle to be connected to your computer.
Amount of trading
If you plan to do a lot of trading, you’ll need a wallet with advanced features. Some wallets support a lower number of digital assets, so you’ll want to opt for one that caters to a wider range of coins. You’ll also need to be aware of any restrictions the wallet has around trading. A cold wallet is the better choice if you intend to trade and store higher volumes of digital currency.