Cryptocurrencies are stored in digital wallets, which can be categorized as hot wallets or cold wallets. Hot wallets are connected to the internet and are typically software-based, making them convenient for frequent transactions but more vulnerable to hacking and online threats. Examples include mobile apps, web wallets, and exchange wallets.
Cold wallets, in contrast, are offline storage solutions such as hardware wallets or paper wallets. These provide a higher level of security since they are not accessible via the internet, making them ideal for long-term storage of significant amounts of cryptocurrency. It is recommended to use hot wallets for daily transactions and cold wallets for storing larger holdings securely.
