“Hot” crypto wallets: advantages and disadvantages
"Hot" crypto wallets are extremely popular among users of the cryptosphere. However, they have many advantages and disadvantages that you should definitely be aware of.
In the previous article, I analyzed the very concept of a “hot” wallet and gave several specific examples that you can use. However, before you run and download any wallet for yourself, it is worth learning about all the pitfalls that you may encounter. “Hot” crypto wallets are tailored for specific tasks, so they have their pros and cons. Let’s take a look at them in more detail.
“Hot” crypto wallets: undeniable advantages
The obvious and most important advantage of any “hot” wallet is its convenience and accessibility. You just need to download it, remember the password and the seed phrase. And you can already start using it.
Whether it’s an app on your phone or an extension on your browser, it’s always at hand. If you need to instantly buy or sell cryptocurrency, then with the help of a “hot” wallet, this can be done in a matter of minutes, since transactions in it are fast. Ease of use and accessibility are the main advantages of hot wallets.
The second important advantage is that such wallets support a very large number of tokens. This means that you can always interact with almost any asset. And at the same time very quickly.
And the third important advantage is that hot wallets are free. What can not be said, for example, about “cold” or hardware wallets.
What is the main problem with hot wallets?
The most important and main disadvantage of all “hot” wallets is its security. Such wallets are always connected to the network when used, which means that they are vulnerable to hacker attacks. If your computer is hacked, there is a risk that scammers will get to your hot wallet funds. Also, if a fraudster somehow finds out the password from the wallet, it will not be difficult for him to enter it and take all your funds.
There is also a risk that a “hot” crypto wallet may simply close and cease to be supported by developers. This happens extremely rarely, and this should not happen with popular wallets, but there is also a risk of losing funds in this way and it must be borne in mind. Especially downloading unpopular “hot” crypto wallets.
Therefore, “hot” wallets are more suitable for fast trading, buying and selling cryptocurrency. And, most importantly, it is highly not recommended to store a large amount of cryptocurrency in such wallets in the long term!