In order to understand the advantages and disadvantages of the various wallets, it is essential to have a basic understanding of cryptocurrencies and cryptocurrency wallets. Therefore we would like to give you a short theoretical introduction to the topic.
You can imagine a wallet, like a virtual wallet, which stores the access keys for the cryptocurrency, e.g. Bitcoin Cash. Basically, all wallets can be divided into two categories:The distinguishing feature is the connection to the Internet. While hot wallets are connected to the Internet, not connected to the Internet. hot wallets are therefore considered to be considerably less secure because hackers can gain access to the cryptocurrencies via the Internet connection. cold wallets doesn’t have this point of attack.
This is also the reason why large investment companies and cryptocurrency exchanges store a large part of their cryptocurrencies on cold wallets. You should take this as an example! In recent years, many crypto exchanges got hacked and Bitcoin and other coins have been stolen. The private key is a randomly generated string that represents the ownership of the cryptocurrency. Therefore the Private Key must never be passed on to third parties.
Author : Jake Simmons