Tech Review

Beginners Guide to Crypto Wallets: Learn about cold wallets, hot wallets and enter the era of passive income

Crypto Wallet

When entering the field of crypto trading, one not only has to learn about which currencies to look out for and when to buy and sell, but also more importantly, which kind of wallet to use. Most crypto aficionados know this, hackers pose a great threat to traders, best case scenario, only minor losses, worst case scenario, all assets in your wallet are cleared out, so this further stresses the importance of picking the right crypto wallets to put your assets in, understand which type of wallet is more suitable for which kind of assets to ensure its security.

Types of Crypto Wallets: Learn the difference between cold wallets and hot wallets to ensure the security of your assets

Based on the type of key, there are two ways to store your assets, in a "cold wallet" or a "hot wallet", the major differences being whether the wallet is regularly connected to the internet and the way the assets are stored, below is a simple explanations to the difference between the two types of wallets and how each functions.

What is a cold wallet?

Cold wallets are offline and cannot be compromised via the internet and consists of these two types below:

  • Paper Wallet
    Key is outputted into random numbers then inscribed or printed on paper.
  • Hardware Wallet
    Large sums of crypto assets are recommended to be stored in hardware wallets, which is usually in the form of a USB drive, it is not prone to hacks because the user's keys cannot be accessed by the internet, but there is still the risk of physically losing the device itself.

What is a hot wallet?

Hot wallets are actively connected to the internet.

  • Web Wallet
    Most new users store their assets directly in an exchange or custody account, this is the most common type of hot wallet.
  • Desktop Wallet
    Desktop wallets involve downloading an application onto a computer, which is more convenient but poses risk of being hacked.
  • Mobile Wallet
    Mobile wallets are apps downloaded onto a mobile device, as one of the most convenient ways to store crypto assets, they're easy to carry around and can be accessed anytime anywhere.

Which wallet should I use? Follow these 5 rules to protect the safety of your crypto assets

What are hot/cold wallets

Below are 5 aspects to consider when choosing between a hot/cold wallet in terms of convenience, security, supported currencies, cost and user word of mouth to give you a better understanding which one to use.

Crypto Wallet Consideration 1: Convenience

Hardware wallets mostly transmit keys via a cable or bluetooth connection, paper wallets are just pieces of paper with random numbers printed on them, which is the input used to conduct transactions. Hot wallets can be used whenever and wherever there is internet connection, they often have easy to use user interfaces and require less effort.

Crypto Wallet Consideration 2: Security

When compared to hot wallets, cold wallets hold the advantage of security because they're offline and less prone to cyber attacks, but do beware that when using a paper wallet to make sure the software outputting your key is secure and not a risk of containing malware.

Hot wallets need to be connected to the internet so are more prone to cyber attacks, but all transactions need to go through a hot wallet when being traded no matter which type of wallet it was stored on, therefore the best choice would be to choose a mainstream exchange or custodian with secure firewalls and maintenance.

Crypto Wallet Consideration 3: Supported Currencies

When using a wallet for the first time, it is recommended to use a hot/cold wallet supplier that supports multiple trusted and stable currencies to meet needs of daily transactions. We'll use the tokens supported by PARALAND's collab cold wallet, the CoolWallet Pro as an example.

  • Mainnet currencies:
    BTC / BCH / ETH / ETC / Binance Chain / Binance Smart Chain (BSC) / Cosmos / Polkadot / Tron / Litecoin / XRP / Stellar / Zen / Kinesis Gold / Kinesis Silver / ICON / KSM / Cronos / Polygon / / Cardano / Arbitrum / Terra Classic (LUNC) / Terra (LUNA) / Tezos / AVAX C-Chain / Solana (SOL) / Optimism
  • Official supported token types:
    Over 150 types of tokens are supported, including ERC-20, ERC-20(Arbitrum, Polygon), BEP-20, TRC-20, SPL Customized Token, and ERC-712 and ERC-1155 NFT tokens.

For more information on which cryptocurrencies are supported please refer to Mainnet Currencies and Tokens supported by CoolWallet

Crypto Wallet Consideration 4: Cost

Hot wallets are mainly secured by exchanges or custodians, other than gas fee, no other fees will be charged, as for hardware cold wallets, based on the quality and functions, prices range from $50-$200, an unused mobile device can be used as a digital wallet in that sense too.

Crypto Wallet Consideration 5: Word of Mouth

A mainstream exchange or custodian with credibility will constantly have to deal with cyber attacks, therefore it is recommended to use a hot wallet provider with good word of mouth, paper wallet generators with good credibility are another good option as well as hardware wallets that are known to be secure that are available on the market.

Join PARALAND on Discord for a chance to win a cold wallet in PARADORA's Box

PARALAND's collab cold wallet with CoolWallet Pro has all the same features including the highest security grade of CC EAL 6+, equipped with functions such as crypto trading, viewing, staking and NFT collecting, and supports multiple currencies. It has a chic and cute design with a simple yet fashionable feel to it, combined with Land and Territory design incorporated into it, it is a must have!

The PARALAND edition CoolWallet Pro is a prize obtained from opening PARADORA's Boxes, keep up with PARALAND on Discord to get ahold of all the latest news and earn keys to open PARADORA's Box!