Hot Wallets are created online. This means the seed phrase for the wallet is also generated online. Hot Wallets potentially expose the owner to greater threats and exploitation than their offline counterpart.
Cold Wallets, also referred to as Hardware Wallets, offer anadditional layer of security by enabling users to actively generate their own seed phrases during the setup process in an offline environment, effectively reducing exposure to online threats.
A Seed Phrase is like a master password for your digital assets. It's a sequence of words, usually between 12 to 24, generated during the setup of a crypto wallet. Think of it as the key to your safe, but instead of being a physical object, it's a combination of words that grants access to your funds.
Your Private Key is the secret code that gives you ownership and control over your cryptocurrency. It's like the PIN to your debit card – something you should never share with anyone. The private key is mathematically linked to your public address, which is where others can send you cryptocurrency. While the seed phrase is a user-friendly way to manage your private key, it's the private key itself that serves as the ultimate access point to your funds.
