Cryptocurrency Wallets Pros and Cons

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What you need to know about Cryptocurrency Wallets

Jokingly, I was burning calories with my friends when I first heard about “Bitcoin” and “cryptocurrency”. I became an illiterate while they were discussing about Bitcoin and cryptocurrency. But in order not to bring myself down, I had to keep my mouth shut and later on, I had to browse on it on my own. And believe me; I was astonished to know then what Bitcoin cryptocurrency is all about. Okay, what then is cryptocurrency and bitcoin?

Cryptocurrency by definition is a digital asset designed to work as a medium of exchange that uses cryptography to secure it transaction, to control the creation of additional units and to verify the transfer of assets. Literary, cryptography is all about analysing protocols which prevent anybody from reading private messages. Bitcoin on the other hand means is a type of digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.

In a literary sense and to a layman, hot wallet is like the type of purse or wallet that we do carry all about, mostly in our pockets while cold wallet is like the kind of savings that we all do in bank system. In other sense, you can easily use hot wallet if you know you are a type that will be using his account most of the time while the cold wallet is meant for long time storage. Hot wallets are wise and easy to use in transacting. However, it should be noted that it is not advised to store larger amount of cryptocurrency in hot wallet. Cold wallet on the other hand is largely safe and security guaranteed. It is advised for a person that wants to save and store larger amount of money. However, it should also be noted that money cannot be spend directly from cold wallet. Instead, you can only spend by re-importing your key into hot wallet. So, by this, what is now the essence of choosing cold wallet upon hot wallet?

HOT WALLETS

(PROS)

  • Funds can be accessed easily
  • Different kinds of options for different devices
  • There is efficiency in accessing individuals’ currencies.
  • Sending and receiving is also however simple

(CONS)

  • The details of restoration is prone to damages and lost
  • Easy avenue for online internet fraud or cybercrime
  • Funds or money can get lost permanently at any time. However this can occur without a serious backing up private keys and mostly, seed words.

 

COLD WALLETS

(PROS)

  • As per since it is offline, unlike hot wallets, it is security guaranteed from online internet frauds or cybercrime.
  • It safer for a person that needs or wants to hold a large amount of coins for a longer time in a very ideal place.

(CONS)

  • It is not proper for day to day transaction.
  • It is prone to theft, majorly from human error or carelessness.
  • It can be somehow frightening for a newbie

 

In conclusion, hot wallets are found to be largely insecure and it is not recommended the storage of larger amount of cryptocurrency. However, on the other hand, cold wallets are extremely secure and safer for someone that need or wants to save a larger of cryptocurrency. It should also be noted that money cannot be spend directly from cold wallet. Instead, one has to re-import his private key into a hot wallet.

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