Hot vs cold crypto wallets: what's the difference?

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.

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.

Simple habits that help

1. Keep only what you're actively using in a hot wallet.
2. Write the recovery phrase down offline and never share it or type it into a website.
3. Turn on two-step login for every exchange or app account.
4. Double-check the address before sending, since crypto payments can't usually be reversed.

If you're launching a crypto app

SendPay crypto exchange platforms let your customers buy, sell and hold crypto alongside cash, powered by licensed partners. It is free to design and preview, and you only pay when you publish. SendPay tells you in writing which licences apply to your platform before you pay.