Today there are two main types of wallets – with hot and cold storage, each of them has its advantages and disadvantages.
The Lithuanian crypto license allows wallets to operate legally, as most users are used to entrusting only trusted companies that operate within the law.
Features of crypto wallets with hot and cold storage
Anyone connected to the world of cryptocurrencies has come across crypto wallets. It is a convenient and useful tool that allows you to safely store large amounts of currency and perform various financial transactions, including international ones.
Today there are two main types of wallets – with hot and cold storage, each of them has its advantages and disadvantages. The Lithuanian crypto license allows wallets to operate legally, as most users are used to entrusting only trusted companies that operate within the law.
- Easy to use;
- A large number of functions;
- Supports a large number of currencies;
- You can log in from any device;
- Fast transactions.
- Poor protection;
- Easily hacked.
They are commonly referred to as those with internet access. There are 2 main types of hot wallets – software and web. In the first case, you install special software on your computer or mobile phone. You can now log into the system at any time and perform various transactions.
Web tools exist on the Internet. Users go through registration and you can safely use all the benefits of such a tool. It is very similar to the standard e-wallets we use with fiat currencies.
Hot storage wallets are rarely used to store large sums of money. However, it can be very convenient to make a financial settlement in a store using crypto assets.
- Perfect protection;
- Suitable for storing large amounts of currency.
As already mentioned, hot storages are completely unsuitable for storing huge amounts of currencies as they are easy to hack. In this case, a wallet with cold room comes to the rescue. There are several varieties of this type at the moment, but only material is popular. This is because it is compact, inexpensive and perfectly protects assets.
Cold wallets do not need a constant internet connection. It is a USB key where the software is stored, necessary for the existence and protection of crypto-currencies. Such a carrier costs an average of $150, but the cost depends on how much currency you plan to store and how many types of crypto assets you are interested in.
If you need to perform an action, such as making a financial transfer, connect the medium to your computer and the Internet, complete the task, and then disconnect it again. The advantage is that it becomes difficult to steal money even when connected to the Internet, thanks to the protection based on two private keys or a signature.
Of course, using a cold tool every day is very inconvenient, but it was created for storing assets, not for active use. It does a great job with this task. Even many cryptocurrency exchanges use such tools to hold onto their reserves.
What to look for when choosing?
When choosing a cryptocurrency wallet, you should consider the following points:
- How often do you plan to use it?
- What cryptocurrencies are you interested in and how much money do you plan to store on a medium;
How much are you willing to spend?
- Which device (computer or smartphone) will you be using?
So, if you want to use the wallet every day and use your mobile phone, you can choose any wallet with hot storage. In addition, registration on these platforms is free.
But, if you need a cache where you will store large amounts of assets, it is better to choose hardware that will reliably protect your assets.
In fairness, it should be noted that the developers are now trying to improve the wallets, to make the hot ones more secure, and the cold ones more convenient to use. It is assumed that soon there will be an alternative option with all the advantages of the parties by analogy with hybrid exchanges.
How legal is it to use crypto wallets?
Lithuania is one of the countries that welcomes cryptocurrencies and has created convenient and understandable regulatory conditions. The crypto wallet must obtain the appropriate license, then any user will use it in compliance with the law.
Additionally, currency exchange is tax exempt and financial transfers are subject to VAT, similar to fiat currencies. As for NFTs, they are assimilated to securities and governed by law. The Lithuanian authorities have tried to do everything to make the regulation of cryptocurrencies as simple as possible.
So, crypto enthusiasts have long appreciated the benefits of using wallets. It’s a great tool for securing your assets, using currencies to earn money, and performing other day-to-day tasks, such as buying movie tickets.
Wallets are better for everyday use of cryptocurrencies with hot storage, but are hungry for the security of large volumes of assets. Each wallet that operates on the territory of Lithuania must obtain a license and only after that work legally.