How to choose a virtual wallet? Hot wallet, cold wallet, centralized wallet, smart contract wallet

How to choose a virtual wallet?

Virtual wallet - Cryptocurrency wallett, also known as cryptocurrency wallet, entering the NFT and currency circle. A virtual wallet is the first necessary condition. Just like a bank account, it is dedicated to the storage, sending, and receiving of virtual currencies. However, virtual currencies are not actually stored in the wallet, but all transactions are recorded in the blockchain, so it can also be said to be a virtual "database" of cryptocurrency.

Receiving virtual assets through a wallet address (public key) is just like transferring fiat currency in traditional way. You only need to provide your bank account number to the other party, and the other party can unilaterally complete the transfer. The corresponding wallet key (private key) is like a traditional bank password. Only those who know the password can use the assets in the account. Therefore, special attention should be paid that the private key of the virtual wallet cannot be provided or authorized to the website at will.

The main types of virtual wallets currently include:

1. Hot wallet

It may be an app or a web browser program, also known as a Defi wallet. By entering the private key password, you can use your assets quickly and conveniently. Because it is simple and easy to operate, if you need to make small or frequent transactions, you will usually use a hot wallet. However, because the private key is exposed to the connection environment, it is more prone to the risk of being stolen by hackers.

2. Cold wallet

It is a hardware device, which may be a USB disk, so it can also be called a "hardware wallet". It does not need to be connected to the Internet at all times. When you need to access it, you can plug it into a computer or smart device to store and read your wallet. It can sign offline and the private key will not be exposed to the Internet environment. However, it is more troublesome to use and the hardware price is thousands of dollars. Currently, most of them are used by Holders who buy more virtual assets and hold them for a long time and do not trade frequently.

3. Centralized Exchange Wallet

Similar to traditional banking institutions, it is usually a virtual currency exchange (company) where you can buy and sell virtual currencies. You register an online trading account and entrust the assets in the account to the exchange for safekeeping. The two sides are based on trust. The account does not have a private key, and the exchange website is logged in with the account number and password, which is very convenient to use.

4. Smart Contract Wallet

Abandoning the private key and letting the smart contract perform the entire wallet service, basically everything that can be achieved by the smart contract can be included in the service. At the same time, there are also more secure functions such as account freezing, introduction of community private key reply, guardian, etc., so the security will be higher than the general hot wallet, but the definition of smart contracts is not very consistent at present.

The above is our wallet summary sharing this time!

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