What is a crypto wallet?

Much like a wallet that’s designed to hold your cash and ATM cards, a crypto wallet is a tool that lets you store your crypto. Through your crypto wallet, you can access your crypto on the blockchain, and conduct send and receive transactions.

There are two main types of crypto wallets, each with a specific use that you can choose from. Let’s dive in:

Hot wallets

These wallets are also known as “online wallets” since they are always connected to the internet. This is the kind of wallet you would have access to on Rain. You can access this type of wallet through apps or websites, where you have a wallet for each cryptocurrency you choose to own and trade.

Because of this, the funds on these wallets will always be available to you, making them a convenient option for quick trades and everyday transactions. However, they have a higher risk of hacks or malware because they're always online.

Cold wallets 

The key feature of these wallets is that they are offline. They are not connected to the internet, granting them maximum security. This is why cold wallets are ideal for traders or investors who hold large amounts of crypto.

These wallets can be in the form of hardware wallets, which is a small device that is similar to a USB stick that you can connect to a computer or a mobile device to access. Another example of cold wallets is paper wallets, which is where your private and public keys are printed out (usually in QR codes) on a sheet of paper.

The nature of cold wallets secures funds from being digitally hacked. However, losing the physical hardware or paper wallet can be detrimental, especially if there are no backups in place.

With the information above, you can determine what type of wallet you want to use for your crypto trading. Many traders use a combination of both wallets, each designated for one aspect of their trading activity. Regardless of your choice, one crucial reminder is to always keep backups of your wallet recovery phrases and never share your private keys.