💱Hot Wallet vs. Cold Wallet

What is a Hot Wallet vs Cold Wallet?

Hot Wallet: crypto wallets kept online and connected to the internet

Cold Wallet: crypto wallets kept offline and not connected to the internet

Custodial Wallet: managed by an exchange on your behalf

Non-Custodial Wallet: self-managed wallet

Hot Wallets

For hot wallets, user keys are encrypted and stored in the application (from custodial hot wallets such as MetaMask, or Coinbase) which is online. Clients can also create a non-custodial hot wallets at their own risk. Hot wallets are more vulnerable to cybersecurity attacks but are a convenient tool to use in the NFT space.

Cold Wallets

Cold wallets are offline and user keys are encrypted and stored in a physical location using hardware. They are much more secure and not prone to cyber vulnerabilities but can be inconvenient to work with and store.

Best Practices

If you would prefer more security, we do recommend a mixture of hot and cold wallet management. Best practices include periodically transferring hot wallet funds to the cold wallet for more secure storage.

It’s essential for all clients to use a hot wallet to transact on RareCircles and receive funds.