Because hot wallets are linked to the internet, they are vulnerable to theft. Cold wallets, on the other hand, are not linked to the internet and are thus considered much safer.

Some experts may advise creating a wallet that is not linked to any of the existing crypto exchanges (hot wallets). Why? Even if the crypto exchange closes or is unable to process requests within the timeframe specified, you can still have simple and instant access to your cryptos.

Hot wallets and cold wallets are two types of cryptocurrency storage solutions, each with distinct advantages and uses.

Hot wallets are connected to the internet, making them more accessible for everyday transactions. They are typically found on exchanges or mobile apps, allowing users to quickly send and receive cryptocurrency. While convenient, hot wallets are more vulnerable to hacking and online threats due to their constant internet connection.

Cold wallets, on the other hand, are offline storage solutions like hardware wallets or paper wallets. They offer enhanced security by keeping private keys offline, significantly reducing the risk of cyberattacks. However, cold wallets are less convenient for frequent transactions, as accessing funds requires connecting the wallet to a device.

For frequent traders, hot wallets provide flexibility, while long-term holders prefer the enhanced security of cold wallets.