A wallet is software or a device that keeps your keys and signs payments. The real question is where your private key lives.
Hot wallets
A hot wallet is an app on a phone or computer connected to the internet. It is convenient and free, perfect for small amounts you spend. But if the device is infected or stolen, the key can be exposed.
Hardware wallets
A hardware wallet is a small dedicated device that keeps the private key inside and never lets it out. You prepare a payment on your computer, the device signs it, and you confirm the address and amount on its own screen. Even an infected computer cannot steal the key.
Cold storage
Cold storage means the key has never touched a device connected to the internet. Hardware wallets used carefully are the most common form of it.
- Spending money, small amounts: a phone wallet
- Savings: a hardware wallet
- Always: buy hardware only from the official manufacturer, never second hand