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Hot Wallets Vs. Cold Wallets – What’s the Difference?

Newcomers to the digital currency space frequently have questions surrounding hot wallets and cold wallets. Specifically, how do these different cryptocurrency wallets work, what type of investment is best suited for what type of wallet, and how are these digital currencies kept secure? Let’s take a closer look.


Hot vs Cold Wallet


Hot Wallets

The primary difference between a hot wallet and a cold wallet is that a hot wallet is kept online and connected to the internet, while a cold wallet is not.

Hot wallet storage is quick, convenient, and conducive to cryptocurrency transactions, but it also has disadvantages. Because hot wallets are connected to the internet, they are significantly more vulnerable to hacks. It is advised to only keep a small amount of money in a hot wallet, then, to offset the risk. While these hacks are not common, they do occur periodically.

Hot wallets can be thought of like checking accounts, while cold wallets are more like saving accounts. It makes sense to keep a small amount directly available in your checking account, while the vast majority is kept safely stored in your savings account, or cold wallet.


Cold Wallets

Cold wallets are kept offline and stored either on hardware or paper. Because they are offline, they are kept safe from hackers, but users still assume responsibility to ensure that their paper or hardware wallet is not damaged or stolen.

Hardware wallets are physical devices where you can store your cryptocurrency.  They come in a few different varieties but the most common one is a USB drive. Common examples of cold storage wallets include the Trezor and Ledger wallets.

Meanwhile, paper wallets are also an offline cold storage cryptocurrency option that includes printing out your public and private keys on a piece of paper which you can store and save in a secure place. This option gives you, the user, complete control, but you need to make sure you don’t lose the paper.

Because cold wallets are kept offline, they act as a barrier against hackers, making them the safer, more secure options for long-term investments. This is why, at Bitcoin IRA, we’ve partnered with leading cold storage provider BitGo, the leader in multi-signature security and cold storage wallets.


BitGo Cold Storage Wallet

Headquartered in Palo Alto, BitGo’s mission is to make digital currencies usable for business in a regulated economy. The leader in multi-signature technology, BitGo’s technology solves the most difficult security problems associated with blockchains, making them the most trusted providers in the space.

Furthermore, when you open up a BitGo account through Bitcoin IRA, three unique keys are generated. One is with digital wallet BitGo, one is with Bitcoin IRA custodian provider, and one is with backup key provider The private keys are spread across multiple machines, protecting Bitcoin IRA funds against single machine compromise or single key loss, and customers do not have to worry about holding onto the keys themselves.


Protecting Your Bitcoin IRA Investment

Investments in retirement funds are inherently long-term endeavors, which is why they are well-suited for cold wallet storage, where users don’t require access to their coins for months or years at a time. Working with full-service retirement technology company Bitcoin IRA to set up your BitGo account, ensures you will have all of the resources you need to store your retirement funds securely and with peace of mind.

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Why BitGo Cryptocurrency Wallets Are The Best

Why BitGo Cryptocurrency Wallets Are The Best

If you’re looking to invest in a Bitcoin IRA, you likely have a lot of questions around Bitcoin wallets. Similar to a bank account, a customer uses a Bitcoin wallet to send and receive Bitcoin transactions. Just as we rank the reliability of bank accounts, some Bitcoin wallets are much higher quality than others.

Here at Bitcoin IRA, we are proud to have an exclusive relationship with BitGo. The leader in multi-signature encryption technology, BitGo is the world’s most secure bitcoin wallet with a comprehensive suite of services that surpass other Bitcoin wallet providers in the industry. Let’s take a closer look at why BitGo wallets are the best.

Unbeatable Security

Bitcoin IRA customers’ cryptocurrency investments are stored using BitGo’s cold storage wallet. Cold storage wallets are much better suited for long term investments than hot wallets, primarily because they are not accessible online. Taking wallets offline eliminates a lot of the security threats around malware and hacking, but there are many factors that distinguish BitGo as the industry leading cold storage wallet as well.

For example, Bitcoin IRA customers store their investment with BitGo’s multi-signature wallet that generates three unique, private keys. These keys are stored with BitGo, Bitcoin IRA’s custodian Kingdom Trust (which BitGo recently entered into an agreement to acquire), and Bitcoin IRA’s backup key provider,

Some customers prefer holding their own security keys, and other wallet providers list that as a selling point, but we have a different point of view here at Bitcoin IRA. Consider the last time you misplaced something. Chances are, it was pretty recently. Security keys for cold storage wallets are typically stored on small USB drives or printed on paper. Could you imagine throwing that out and accidentally losing thousands or millions of dollars in your cryptocurrency investment? It’s a scary thought, and when you work with Bitcoin IRA and store your funds using BitGo, one that you don’t have to worry about.

Supports Multiple Cryptocurrencies

Part of the appeal of investing in cryptocurrencies is diversifying your assets, yet many digital currency wallet providers only support Bitcoin. BitGo, however, supports Bitcoin, Ethereum, Ripple, Litecoin, Bitcoin Cash, and Ethereum Classic, and customers that work with Bitcoin IRA to store their cryptocurrency IRA investment in a BitGo wallet have reported overwhelmingly positive experiences, no matter which digital currency they are investing in.

Solid Track Record

Company reviews matter, and a google search for many cryptocurrency wallets in the marketplace contain a slew of concerning complaints, ranging from spam to nonexistent customer service.

BitGo’s reviews, on the other hand, are largely positive. “BitGo offers a very secure wallet solution which remains approachable by the average consumer on the street,” The Merkle writes. “Convenience and security often do not mix that well, but BitGo shows it can be done.” Other reviews for the digital currency wallet offer similar praise, with its highly secure functionality frequently recognized as a major selling point. Another major selling point? Prompt customer service.

Unbeatable Customer Service

When customers entrust third-party companies with their financial investments, they should expect unparalleled customer service that swiftly addresses customer concerns. BitGo, based locally in Palo Alto, offers an extensive FAQ page on their site as well as additional assistance from their support team. Furthermore, Bitcoin IRA customers also have access to premium support.

Conversely, many other cryptocurrency wallet providers are based abroad and do not provide clear contact information, with customers calling, emailing, and messaging on social media repeatedly to no avail. Ultimately, if you are making a sizable digital currency investment and have questions, you want to depend on a trusted provider that will call you back.

Using BitGo to Store Your IRA Investment

Investing in cryptocurrencies for your IRA or 401(k) is a long-term endeavor, and working with a trusted provider should be the top priority. That’s why we are proud to partner with BitGo, which remains the industry leader in digital wallets. To get started storing your cryptocurrency investment in a BitGo cold storage wallet,  give Bitcoin IRA a call today at 877-936-7175.

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