{"id":150291,"date":"2022-04-05T13:41:15","date_gmt":"2022-04-05T20:41:15","guid":{"rendered":"https:\/\/www.mcafee.com\/blogs\/?p=150291"},"modified":"2024-03-28T22:50:35","modified_gmt":"2024-03-29T05:50:35","slug":"cold-wallets-hot-wallets-the-basics-of-storing-your-crypto-securely","status":"publish","type":"post","link":"https:\/\/www.mcafee.com\/blogs\/internet-security\/cold-wallets-hot-wallets-the-basics-of-storing-your-crypto-securely\/","title":{"rendered":"Cold Wallets, Hot Wallets: The Basics of Storing Your Crypto Securely"},"content":{"rendered":"

If you\u2019re thinking about crypto, one of the first things you\u2019ll want to do is get yourself a good wallet.\u00a0<\/span>\u00a0<\/span><\/p>\n

Topping the several important things a new cryptocurrency investor needs to think about is security. Rightfully so. Cryptocurrency is indeed subject to all kinds of fraud, theft, and phishing attacks, just like the credentials and accounts we keep online.\u00a0<\/span>\u00a0<\/span><\/p>\n

But here\u2019s the catch. <\/span>L<\/span>ost or stolen cryptocurrency is terrifically difficult to recover<\/span><\/a>. By and large, it doesn\u2019t enjoy the same protections and regulations as traditional currency and financial transactions. For example, you can always call your bank or credit card company to report theft or contest a fraudulent charge. Not the case with crypto. With that, you\u2019ll absolutely need a safe place to secure it. Likewise, <\/span>in the U.S. many banks are FDIC insured<\/span><\/a>, which protects depositors if the bank fails. Again, not so with crypto.<\/span>\u00a0<\/span><\/p>\n

So, when it comes to cryptocurrency, security is everything.<\/span>\u00a0<\/span><\/p>\n

What makes crypto so attractive to hackers?<\/span><\/b>\u00a0<\/span><\/h2>\n

Cryptocurrency theft offers hackers an immediate payoff. It\u2019s altogether different from, say, hacking the database of a Fortune 500 company. With a data breach, a hacker may round up armloads of personal data and information, yet it takes additional steps for them to translate those stolen records into money. With cryptocurrency theft, the dollars shift from the victim to the crook in milliseconds. It\u2019s like digital pickpocketing. As you can guess, that makes cryptocurrency a big target.<\/span>\u00a0<\/span><\/p>\n

And that\u2019s where your wallet will come in, a place where you store the digital credentials associated with the cryptocurrency you own. The issue is doing it securely. Let\u2019s take a look at the different wallets out there and then talk about how you can secure them.<\/span>\u00a0<\/span><\/p>\n

Hot wallets and cold wallets for crypto<\/span><\/b>\u00a0<\/span><\/h2>\n

Broadly, there are two general categories of wallets. First, let\u2019s look at what these wallets store.<\/span>\u00a0<\/span><\/p>\n

A wallet contains public and private \u201ckeys\u201d that are used to conduct transactions. The public key often takes the form of an address, one that anyone can see and then use to send cryptocurrency. The private key is exactly that. Highly complex and taking many forms that range from multi-word phrases to strings of code, it\u2019s your unique key that proves your ownership of your cryptocurrency and that allows you to spend and send crypto. Needless to say, never share your private key. <\/span>\u00a0<\/span><\/p>\n

With that, there are two ways to store your keys\u2014in a hot wallet or a cold wallet.<\/span>\u00a0<\/span><\/p>\n\n\n\n
\n

\u00a0<\/span><\/h3>\n

Hot Wallets:<\/span>\u00a0<\/span><\/h3>\n

 <\/p>\n

    \n
  • These wallets store cryptocurrency on internet-connected devices\u2014often a smartphone, but also on computers and tablets\u2014all of which allow the holder to access and make transactions quickly.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n

    \u00a0<\/span><\/p>\n

      \n
    • Think of a hot wallet as a checking account, where you keep a smaller amount of money available for day-to-day spending, yet less securely than a cold wallet because it’s online.<\/span>\u00a0<\/span><\/li>\n<\/ul>\n

      \u00a0<\/span>\u00a0<\/span><\/td>\n

\n

Cold Wallets:<\/span>\u00a0<\/span><\/h3>\n

 <\/p>\n