Now, that is quite an interesting topic to discuss today. However, you must be pondering on the fact that ‘wallets actually have temperature difference?'
You can rest assured that our friends, the mobile application development companies have little to contribute towards altering the temperature of the wallets but they can stand to benefit from the concept. And for the rest of us, who are not really aware of cold and hot wallets, let us dig into the difference underlying the two.
This is not a hidden fact that digital currency such as Bitcoins, Ethereum, Dash, Zcash, and others exist big time in the financial world today. Most of us are already going bonkers for the bitcoins especially as its value is on an exponential rush to reach an undefined height.
However, these coins need a place for storage as we have the e-wallets such as Paytm at our service. Likewise, there are the online and offline wallets at our disposal to store the cryptocurrencies.
But, why they are termed as ‘Hot and Cold’??
Google them and you have many definitions popping up for them. Let’s see:
A ‘hot wallet’ can be defined as a Bitcoin wallet, which remains online through internet connectivity. In other words, digital currency, which is not left idle in cold storage rather used for online transactions and paying withdrawals.
mCommerce transactions can be conducted by incorporating these ‘Hot Wallets’ into rendering enterprise mobility solutions to users indulging in the online purchase.
‘Cold wallet', on the other hand, comes up when these digital coins and or bitcoin private keys are created to be stored in a secured cold storage. This is more important for bitcoin players owing to the high security offered to the lump sum amount of coins kept there.
Going by a more simpler choice of words, ‘Hot wallets' are like physical wallets where limited cash is kept for making smaller payments. Contrasting to it, ‘Cold wallets' are similar to the savings account.
Both serve the different purpose and it is advisable for digital currency owners to have possessions of both.
When we speak about their difference, the major point underlying them is but obvious ‘Security’.
Cyber thefts and hackers are growing strong by the days discovering the loops to infiltrate howsoever tight security is. Moreover, when there is a question of money involved, hackers work their head to lay hands on endless funds.
This is majorly where the so-called ‘cold wallets' come handy.
Hackers will not be able to steal your digital assets if they are not connected to the internet wherein ‘hot wallets' work on internet connection and the assets stored there depends largely upon the security habits of individuals and third parties. But, we all know when something is connected to the internet round the clock it is highly vulnerable to security breach from the smart hackers.
This is where the intelligence of the bitcoin owners might come to aid if they decide on the minimal value of assets to be kept in the hot wallets. Hence, quite an obvious fact and which is the hackers will not waste resources to gain access to such a small amount.
VOIlA!! Your bitcoins are safe.
Having cleared the point of difference, it is time to shed some light on the different types of hot and cold wallets available for us.
• Digital asset exchange accounts
‘Poloniex’, ‘Coinbase’ and ‘Bittrex’ store your funds in their servers, out of which, Coinbase is more security intensive yet not a safe place for large fund storage.
• Software wallet application
‘Exodus.io’ and ‘Dash QT wallet’ are applications downloaded directly to the personal computer and does not store the private keys right on the server. But, they still remain vulnerable to the fact that the hackers easily gain access to your computer.
• Paper Wallets
Created through different methods or open source tools such as ‘bitaddress.org’, Paper wallets are nothing but Bitcoin private key printed on paper and can be stored anywhere offline with minimal threat to getting stolen other than physical theft.
• Hardware Wallets
A physical device kept offline but is plugged into a computer when needed. Few examples of these hacker proof hardware wallets are ‘KeepKey’, ‘Trezor.io’, and ‘Ledger Nano S’.
• Offline computers with software applications
Similar to hardware ones, these wallets such as ‘Armory’ or ‘Electrum’ run on a dedicated offline computer. Payments are received offline but are secured since they are stored in an offline computer, also cutting off any use of the external server for data exchange.
Point to be noted:
We have come up but with just a few names. More suggestions are always welcomed.
Time to wrap up
Best enterprise app development companies can find it useful given an option to adopt for such digital currencies to be a medium of monetary exchange with these wallets holding a space alongside other payment gateways. For all those who indulge in cryptocurrency mining and those who refrain from it until now, building your knowledge bank on different types of bitcoin wallets will cause no harm.
But, once these cryptocurrencies acquire worldwide legal acceptance, there will be a high possibility of physical currency taking a permanent place in the cold storage.
Will Bitcoin owners will be the winners?? Wait for the FUTURE…
Category: Mobile App DevelopersCompany about: Fluper Ltd. is an authentic, certified and top rated mobile application design and development company with engineers expertising in native application development, customized applications provisioning end-end 360degree mobile app solutions. We have specilized in Android, iOS, iPad, Tablets and Wearable App Development Services. We have been working in the IT Mobile App Domain and Verticals since 2013 providing following services: #Enterprise Applications: Business, Banking, Finance, Human Reso ...