All crypto holders understand that when you are picking cryptocurrency to buy, it is crucial to pick proper storage for it. Keeping your assets in a safe place is essential; let’s talk about storage options in more detail.
The main types of crypto wallets:
- Cold
- Hot
A cold wallet is a separate device like a USB or ledger that can be attached to the internet when needed and pulled apart once the work is finished. For example, you have coins on a ledger and want to sell some of them. For that purpose, you attach the ledger to your PC and conduct transactions. Once you are finished with selling assets, you disconnect the ledger from the computer. Cold storage is an excellent option for long-term investments.
Hot wallets are those constantly attached to the network. They are suitable for intensive trading such as:
- Day trading
- Scalping.
These trading strategies imply that you place orders to buy crypto and sell it many times a day. Some trades last 15 minutes and repeat many times a day; others last longer and are closed till the end of the day. One way or another, a trader needs to keep track of every single market movement and react quickly. For that purpose, hot wallets are perfect.
Picking A Hot Wallet
Many ask, “Do I need a cryptocurrency wallet?” when working with a crypto exchange. Every large exchange offers a hot wallet. You can buy cryptocurrencies and store them on the exchange wallet as long as you wish. They allow fast and convenient trading right from your smartphone or laptop.
Credible crypto exchanges take good care about the safety of users’ funds. For example, the WhiteBIT platform keeps 96% of clients’ funds offline (cold wallets), providing solid protection for them.
It is advisable to keep most of the investment on the cold wallet and some part on the hot wallet.