₿ Crypto & Web3 · Lesson 2 of 9 · 10 min
Hot vs Cold Wallets
🔐 'Not your keys, not your coins' sounds like a bumper sticker. It's actually the difference between truly owning your crypto and just politely hoping a website still has it in the morning.
💡 Key idea
Self-custody = you own your crypto. Exchange custody = they control it.
🧠 Why it matters
HOT WALLET = online (MetaMask, exchanges). Hackable. COLD WALLET = offline device (Ledger, Trezor). Much safer.
🌍 In the real world
💥 FTX collapse: $8 billion in customer funds disappeared. Hardware wallet users were unaffected.
📌 Takeaways
- Hot = convenient, hackable
- Cold = safer hardware devices
- Hardware wallet for big holdings
📖 Terms in this lesson
Crypto wallet: Where your crypto keys live: hot wallets are online and handy, cold wallets are offline and safer.
✅ Test yourself
Safest crypto storage?
- Coinbase
- MetaMask
- Hardware wallet (Ledger/Trezor)
- Sticky note
Answer: C · Hardware wallet (Ledger/Trezor)
Hardware wallets keep your keys offline — protected from exchange failures and remote hacks, though you can still be phished into handing over your seed phrase.
What is a 'hot' wallet?
- A wallet connected to the internet
- A wallet on a USB stick
- A paper wallet
- A bank account
Answer: A · A wallet connected to the internet
Hot wallets are online — convenient but more exposed to hacks. Cold wallets stay offline.
'Not your keys, not your coins' means...
- Buy more coins
- If you do not control the keys, you do not truly own the crypto
- Keys are optional
- Always use exchanges
Answer: B · If you do not control the keys, you do not truly own the crypto
If an exchange holds your keys, you are trusting them. Self-custody means YOU truly own your crypto.
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