Hot wallets

A hot wallet is a bit like the ‘cash wallet’ you carry with you in that it’s quick and convenient to use, but also potentially vulnerable to pickpockets. This is because hot wallets are connected directly to the blockchain internet, which means they can be used to store, withdraw and trade cryptocurrencies at any time, but also that they’re ‘out there’ at risk of being hacked if your security isn’t tight enough.

Cold wallets

A cold wallet is like a ‘safe’ in your home, far more difficult to get to than the wallet in your pocket or bag. Cold wallets are not connected to the internet and can take the form of specialist hardware, completely isolated computer devices, or even paper wallets (where private keys are written on paper). The added security of cold wallets makes them good for storing large amounts of cryptocurrency long term, but also a slower, more cumbersome option if you actually want to trade or use your crypto.

How does Pepperstone Crypto use hot and cold wallets?

Like all exchanges we use both hot and cold wallets to ensure a service that’s fast and convenient but also as secure as possible. We keep most of our clients’ funds in cold wallets for additional security, but hold a limited amount in hot wallets to allow for fast and fluid day-to-day transactions.