When diving into the world of cryptocurrency, one of the first decisions you’ll face is how to store your digital assets securely. Should you use a hot wallet or a cold wallet? At first, the terms might sound a little odd, but do not worry—at Mundo, we are here to simplify the decision. Let us break it down.

The Default Explanation: Hot Wallets vs. Cold Wallets

• Hot Wallets (Convenience but higher risk): These wallets are connected to the internet. They are convenient for everyday transactions because they allow you to send, receive, and manage your cryptocurrency quickly. However, their internet connectivity makes them more vulnerable to hacking or phishing attacks.
• Cold Wallets (Security but less accessible): These wallets are offline. They store your cryptocurrency in a physical device (like a USB drive) or even on paper. Because they are not connected to the internet, cold wallets are far more secure but less convenient for frequent transactions.

The Easy Way: Imagine It Like This

Think of your cryptocurrency like cash. A hot wallet is like the cash you keep in your everyday wallet—it is easy to access and use whenever you need it, but there is always a risk of theft if you are not careful.

A cold wallet, on the other hand, is like keeping your money in a safe at home. It is much harder for someone to steal from a locked safe, but it is not as convenient if you need the cash while out shopping.

For most people, a balance between the two is ideal: keep a small amount in your hot wallet for daily use, while storing the bulk of your assets securely in a cold wallet.

A Real-Life Problem: Helping Sofia in Bogotá

Meet Sofia, a graphic designer in Bogotá who recently started accepting payments in cryptocurrency. She needs a wallet solution that helps her manage her finances efficiently while protecting her savings.

Here is what happens when Sofia uses both a hot wallet and a cold wallet:

• Hot Wallet: Sofia uses her Mundo wallet (a non-custodial hot wallet) to receive payments from her international clients. Because it is connected to the internet, she can access her funds instantly to pay for business expenses or transfer money to her family.
• Cold Wallet: Sofia also keeps a cold wallet for her long-term savings. At the end of each month, she transfers a portion of her earnings from her hot wallet to her cold wallet, where her funds remain secure and offline, safe from potential cyber threats.

By combining the convenience of a hot wallet with the security of a cold wallet, Sofia feels empowered to grow her business and protect her financial future.

What Happens if You Do Not Take Control?

Now imagine a different reality—one where Sofia had not taken these precautions. She keeps all her cryptocurrency in a single hot wallet, drawn by convenience. Then one day, she receives a message that looks legitimate, asking her to verify her account. Trusting it, she clicks the link, unknowingly giving access to her wallet credentials.

Within hours, her funds are gone. Everything she worked so hard for—her income, her savings, her ability to support her family—disappears into the hands of an anonymous thief. Sofia calls her wallet provider, only to hear the dreaded words: “We cannot do anything to recover your funds.”

This is not an isolated story. Across the world, countless people lose their financial independence every day because they rely on systems they do not fully understand or take steps to secure. In regions where inflation, unstable economies, and banking limitations already make life difficult, losing access to your funds can mean being left without options entirely.