A cryptocurrency wallet is not like any physical wallet that stores money. It does not actually store cryptocurrencies for its users. Rather, it stores the public and private keys that give users access to their cryptocurrencies. There are various types of cryptocurrencies depending on the way they are used and the platform that hosts them. A cryptocurrency wallet can be of two types:

• A hot wallet is an online wallet that is managed by a third-party who has the public and private keys.
• Cold wallets exist offline, on an app in a smartphone or desktop or even as hardware devices.

For users who are storing a minimal amount of cryptocurrencies, they can opt for hot wallets. But in case users are storing large volumes of digital currencies, it would be better to go for cold wallets for added security.