The difference between a hot wallet and a cold wallet comes down to one point: is the private key connected to the internet or not. A hot wallet keeps it on a device that is online, meaning on your phone, in the browser or on your computer. A cold wallet generates it offline and never releases it. Everything else said about the two forms of custody follows from that single sentence.
In practice that means the hot wallet is convenient and always at hand, but carries every risk the device is exposed to. The cold wallet costs a few extra steps and demands that you store a list of words somewhere genuinely safe. Anyone using both in parallel, separating the everyday amount from the reserve, does not have to choose between the forms at all.
Hot Wallet and Cold Wallet: Where the Private Key Sits in Each Case
A wallet does not store coins. The sentence sounds awkward, yet it explains all the rest. Your bitcoin exist as entries in the blockchain, a jointly kept ledger held on thousands of computers at the same time. What the wallet holds is the private key: a very large random number with which you can prove that a g...
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