What is hot wallet vs cold wallet?

Is It Safe to Hold Cryptocurrency in the Binance or Coinbase Exchanges? Both Binance and Coinbase insure their hot storage , but it may be safer to use your own cold storage via a hardware wallet.

Coinbase wallet is a digital wallet, which uses hot storage for cryptocurrencies. This means the Coinbase wallet is a hot crypto wallet . Based on the features of hot wallets in the crypto space, Coinbase wallet stores the majority of the crypto coins online.

A hot wallet is connected to the internet and could be vulnerable to online attacks — which could lead to stolen funds — but it’s faster and makes it easier to trade or spend crypto. A cold wallet is typically not connected to the internet, so while it may be more secure, it’s less convenient.

Wallets are considered safer for storing your cryptocurrencies than exchanges since exchanges relay on a third party which won’t guarantee that your cryptocurrencies will be safe.