Hot Wallets (Online Storage)
Hot wallets are connected to the internet. Exchange accounts, browser extensions like MetaMask and mobile apps like Trust Wallet all fall into this category.
Pros: convenient and fast. Cons: exposed to hacking and phishing. Best for small amounts and frequent transactions.
Cold Wallets / Hardware Wallets (Offline Storage)
Hardware wallets are physical devices that store private keys offline. Ledger and Trezor are the most popular brands, typically costing $50–$150.
Transaction signing happens on the device; the private key never touches the internet. Best practice for securing significant holdings long-term. If the device is lost, access can be restored using the seed phrase.
Seed Phrase (Recovery Phrase)
When you set up a wallet, you receive a 12 or 24-word seed phrase. This generates all your private keys — it is the master key to your wallet.
Write your seed phrase on paper and store it physically in a secure location. Never photograph it, store it in the cloud or share it with anyone. Anyone with your seed phrase has full access to your funds.