A hot wallet (Hot Wallet) is a cryptocurrency wallet that is constantly connected to the internet. Thanks to this, the owner can send, receive, or exchange funds at any moment. Hot wallets include mobile and desktop applications, browser extensions, and wallets on exchanges. Their main advantage is the speed and convenience of everyday use.
Advantages and risks
The constant connection to the network that makes a hot wallet convenient at the same time increases its vulnerability. The private keys are in an environment accessible to online attacks, phishing, and malware.
- convenient for frequent transfers and trading;
- usually free and easy to set up;
- more vulnerable compared with cold storage.
A common approach is to keep in a hot wallet only the amount needed for current operations, and to store the main part of one's assets in a cold or hardware wallet. Such a division helps combine convenience with a reasonable level of security.
