Hot wallets vs cold wallets
Browser and phone wallets, hardware wallets, exchanges and multisig compared. What each protects you from, and what it does not.
On this page
Every wallet is a trade-off between convenience and how hard it is for an attacker to reach your keys. Knowing the difference helps you put each amount of money in the right place.
The main types
| Type | Where the keys live | Good for | Main risks |
|---|---|---|---|
| Browser extension wallet | Encrypted on your computer | Daily DeFi use, airdrop tasks | Malware, malicious extensions, signing bad transactions |
| Mobile wallet | Encrypted on your phone | Payments, small balances | Fake apps, phone theft, signing bad transactions |
| Hardware wallet | On a dedicated device that never exposes them | Long-term holdings | Signing bad transactions, supply-chain tampering, losing the seed backup |
| Exchange account | With the exchange | Buying, selling, fiat on/off ramps | Account takeover, exchange failure or freeze |
| Multisig (for example Safe) | Split across several keys | Large amounts, shared funds, teams | Complexity, losing too many keys |
"Hot" means the keys sit on an internet-connected device. "Cold" means they do not. A hardware wallet is cold storage you can still use day to day, because it signs transactions on the device and only sends the signature to your computer.
What a hardware wallet protects you from
- Malware that reads files or memory on your computer cannot extract the keys.
- A remote attacker who controls your computer still needs you to physically confirm each transaction on the device.
- The device screen shows what you are signing, independent of a possibly compromised computer screen.
What it does not protect you from
- Approving a malicious transaction or signature. If you press "confirm" on a drainer request, the hardware wallet signs it. This is how many hardware wallet users still lose funds. See signature drainers.
- Seed phrase theft. If the backup is photographed or typed into a website, the device is irrelevant.
- Blind signing. On some chains and dApps the device cannot decode the transaction and shows only a hash. Treat a blind-sign request from an unfamiliar site as a red flag.
Exchanges are not wallets you control
Funds on an exchange are an IOU from that company. Exchanges have failed, frozen withdrawals or been hacked. Keep there only what you are actively trading, secure the account properly, and withdraw the rest to a wallet you control. See exchange security.
A sensible setup for most people
- Vault: a hardware wallet that holds most of your funds and connects to almost nothing.
- Daily or farming wallet: a separate account (ideally a separate seed) for DeFi, mints and airdrop tasks, holding only what those tasks need.
- Exchange: only working balances.
That way one bad click costs you the daily wallet, not your savings.