Hot vs cold crypto wallets: what's the difference?
By SendPay Business · · 2 min read
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A crypto wallet doesn't hold coins; it holds the private keys that prove who can move them. A hot wallet keeps those keys on a device connected to the internet, and a cold wallet keeps them offline. The choice is a trade-off between convenience and security.
Hot wallets
Hot wallets are phone apps, browser extensions and exchange accounts. They're quick to use for buying, selling and sending, but because they're online, they're more exposed to hacking, phishing and malware.
Cold wallets
Cold wallets keep keys offline, on a hardware device or even on paper. They're much harder to attack remotely, but slower to use, and if the device or recovery phrase is lost, the crypto can be lost with it.
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Custodial vs self-custody
In a custodial wallet, such as most exchange and money apps, a company holds the keys for you and you log in to your account. In self-custody, you hold the keys yourself. Custodial is easier for most people; self-custody means nobody else can freeze or lose your funds, but nobody can recover them for you either.
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This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. Other companies named in this guide are reference points only and are not affiliated with SendPay Business.