Topic
Hot wallet vs cold wallet
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- Quick fact 1
A hot wallet keeps your keys on a device that's connected to the internet, like a phone app.
Source: SEC Investor Bulletin, Crypto Asset Custody Basics for Retail Investors (Dec 12, 2025)
- Quick fact 2
A cold wallet keeps your keys offline, usually on a small hardware device or on paper.
Source: SEC Investor Bulletin, Crypto Asset Custody Basics for Retail Investors (Dec 12, 2025)
- Quick fact 3
Both kinds still depend on keeping your seed phrase safe.
Source: SEC Investor Bulletin, Crypto Asset Custody Basics for Retail Investors (Dec 12, 2025)
The short lesson
A crypto wallet holds your keys, the secret codes that prove you own your crypto. "Hot" and "cold" describe where those keys live.
Hot wallets are apps on your phone, computer, or browser. Because they're online, they're quick and easy to use. That same connection means malware, fake apps, and phishing links can reach them.
Cold wallets keep the keys offline. The most common kind is a small hardware device that signs payments without sharing your keys with the internet. That shuts out a lot of online attacks. The trade-off is that they take more steps to use, and the device can be lost or damaged. That's why the seed phrase backup matters so much.
There's also a third setup beginners often mix up:
- Exchange account. When your crypto sits on an exchange, the exchange holds the keys, not you. It's convenient, but you're trusting that company to stay honest, stay secure, and stay open.
Some questions to ask yourself before choosing anything:
- Who holds the keys: me or a company?
- Where is my seed phrase, and who else could see it?
- Would I know a fake app or website if I saw one?
This page doesn't recommend any brand or product. If you ever buy a hardware wallet, get it from the maker directly, and never use one that came with a seed phrase already written down.
Related terms
Go deeper in Lesson 8: What not your keys means
Common questions
Which is safer, a hot wallet or a cold wallet?
Cold wallets avoid many online attacks, but they can be lost or misused. Neither is safe without a well-protected seed phrase.
Is an exchange account a wallet?
Not in the same way. On an exchange, the company holds the keys. With your own wallet, you hold them.
Can a cold wallet be hacked?
It's much harder, but people still lose funds to fake devices, tampered packages, and scams that trick them into giving up their seed phrase.
Do I need a cold wallet?
It depends on your situation. This school teaches how each one works. It doesn't tell you what to use.