Understanding crypto wallets is actually this simple

If a bank card is the container for fiat currency, then a crypto wallet is the home for your coins. But the key difference is—your wallet gives you absolute control over your assets.

Wallets are divided into two main types:

“Hot Wallet” = Online Software Wallet

• Mobile apps, computer software, and exchange wallets all count
• Pros: Free and easy to use
• Cons: Hackers can attack via the internet, so the risk is relatively high

“Cold Wallet” = Offline Hardware Device

• Like an encrypted USB, completely offline
• Pros: Extremely secure, hackers can’t reach it
• Cons: Costs about $100 for the hardware, and losing it is a hassle (although you can recover, it’s troublesome)

Another key point: Who controls the private key?

• Non-custodial wallet: You hold the private key → secure but you’re responsible
• Custodial wallet: The exchange holds it for you → convenient but you have to trust a third party

Which one should you choose?

It depends on your needs. If you trade frequently, go for a hot wallet; if you’re a long-term holder, a cold wallet is recommended. It’s a trade-off between cost and security—there’s no perfect solution, only the one that fits you best.

In short: Beginners can start with a hot wallet, and consider a hardware wallet once your assets grow.