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Hot Wallet VS Cold Wallet

When it comes to having a crypto wallet, there are several different “types”. At the heart of it all, every wallet is largely the same: access is secured by your seed phrase or the series of security words. However, in practice, it is helpful to think of wallets as falling into one of two categories: “hot wallets” and “cold wallets”.

Hot wallets are wallets that are connected to the internet and are generally used frequently. Cold wallets are for storing higher-value assets, are used infrequently, and are usually paired with a physical device to add an additional layer of security.

If you store your NFTs in a hot wallet, you should be hyper-aware of basic security. For example, if you have MetaMask installed on your computer, don’t keep it logged in and walk away if someone you don’t trust might access it. Always use a strong password for your account.  

Cold wallets are generally associated with physical devices that help secure your assets. The way they work is that in order to make a transaction, you will need to have the physical device with you, plugged into your computer via a USB cable, and enter a password on it. For this reason, cold wallets are far less convenient to use, but also far more secure. If someone hacks your computer, your assets are still safe because they can’t transfer anything without the physical device + additional password.

Two of the most popular cold wallet brands are Ledger and Trezor (note the Ledger link is an affiliate link, if you buy from here, you are supporting this free Newsletter and ZenAcademy in general).

Security is the most important consideration when it comes to storing your NFTs. You should always make sure that your NFTs are stored in a safe and secure place, whether that is a hot or cold wallet.

You should also take care to practice good digital hygiene, such as:

  1. Be mindful of every link you use. You should always use official links that are on the NFT project’s Discord, Twitter or Website. You should also double and triple check any link or website that you connect your wallet to – scammers are clever and will do things like replacing a lowercase L with a capital i to look the same.

  2. Make sure you store your seed phrase offline. Write it in a place you know will not lose, and back it up in a secondary secure location NEVER store it on a digital device, and NEVER give it to anyone that asks you for it.

  3. Triple-check every transaction you sign. One malicious transaction can drain your whole wallet. When starting out, it’s totally normal to be overwhelmed and confused. Take it slow, ask a friend, ask us (simply reply to this email), and we will always take the time to help you feel secure in your actions.

By taking these precautions, you can help ensure that your NFTs and digital assets in general are safer.