The digital asset market offers many options for storing cryptocurrencies. But technically, all wallets can be divided into two main types: cold and hot. Each of the approaches to organizing the storage of digital assets has its pros and cons. Read the information below to find out more about it.

Cold Wallet: Pros and Cons

A cold wallet is a crypto storage without a permanent connection to the network. Such wallets are usually represented by physical devices similar to a flash drive. After completing the BTC to XRP exchange procedure, you can easily transfer coins to a device for later storage without network access. This approach completely eliminates the remote theft of assets.

Cold wallet developers offer a system for restoring access to assets if the physical device is damaged or lost. The user is asked to write down a seed phrase during the setup. With its help, restoring access to cryptocurrency through another device is easy.

Cold wallets have some advantages and disadvantages that should be taken into account. The main pros are:

  • Ability to create backups;
  • The maximum level of protection against hacking;
  • Suitable for storing large amounts of money;
  • Full control over funds.

Cons include the following:

  • May cause difficulties in use;
  • Limited availability;
  • Risk of loss or damage.

What Is a Hot Wallet and What Are Its Features?

Despite the advantages of cold wallets, many people still prefer hot ones. These are online services for storing cryptographic keys and transaction data. It can be a mobile application, a browser extension, a desktop program, or special crypto exchange tools. The key feature of hot crypto wallets is a constant/regular connection to the network. Therefore, they are more convenient to use and provide almost instantaneous transactions. Key benefits include:

  • Almost constant access to your funds;
  • Convenience and speed of operations with digital assets;
  • A wide range of options for different needs and requests of the user.

Practice shows that a hot wallet is the most popular tool for storing crypto coins and conducting transactions today. Nevertheless, it is important to consider that this option of storing digital coins and tokens is risky. Private keys are usually stored on the network. Therefore, they are always the object of encroachment by hackers and scammers. In this regard, keeping large amounts of money in this way is not recommended.

Custodial and Non-Custodial Storages: What’s the Difference?

If you have exchanged NEAR to ETH and want to keep your coins in a hot wallet, please note that it can be custodial or non-custodial. Custodial storage means that a third party stores the secret keys of the holder. The owner of such a wallet can send and receive payments but does not manage the keys.

Custodial access requires entering a username and password. The interface of such storage is not a blockchain or a cryptocurrency itself. It is rather an intermediate agent. So, the wallet holder simply tells what actions to perform, after which the company performs all blockchain operations.

The holder of a non-custodial wallet has full access to the funds and is also personally responsible for their use. The owner himself manages crypto keys and processes transactions.


If you are an active participant in the blockchain world, you are probably worried about the safe storage of digital coins. A hot wallet (both custodial and non-custodial) is a great choice if you value convenience and speed of transactions. If safety is more important to you, cold storage is perfect. It is securely protected from hacking.


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