What are the differences between cold wallets, hot wallets, and exchanges?

Feature

Cold Wallet

Hot Wallet

Crypto Exchange

Connection to the Internet

No (offline storage)

Yes (online storage)

Yes (online storage)

Security Level

Very high (stores private keys in the security elements)

Moderate (stores private keys in your device)

Low to moderate (depends on the exchange's security measures)

Convenience for Transactions

Low (requires double authentications to approve transactions)

High (quick and easy transactions)

Very high (designed for quick trading)

Susceptibility to Hacking

Low (not directly connected to the internet, strong safety elements)

High (vulnerable to internet threats, e.g. Phishing)

High (attracts more hacking attempts due to large volumes of assets)

Typical Usage

Long-term storage of cryptocurrencies

Day-to-day transactions and trading

Trading, staking, and various other crypto activities