Glossary · H
Hot Wallet
A cryptocurrency wallet connected to the internet, typically a software application (MetaMask, Coinbase Wallet). Hot wallets are convenient for DeFi interactions but more vulnerable to remote hacking than cold (hardware) wallets. Best practice: keep only small amounts in hot wallets.
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How Hot Wallet works in practice
A hot wallet keeps keys on an internet-connected device. Convenient for regular use, and permanently exposed to whatever else that device is exposed to.
Worked example
A browser extension wallet signs transactions in seconds — ideal for day-to-day activity, and holding no more than you would carry in a physical wallet.
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The mistake that costs people money
Malware, malicious extensions and phishing all target hot wallets. The usual discipline is a hot wallet for activity and cold storage for holdings, with the two never sharing a seed.
Hot Wallet: common questions
- What is Hot Wallet?
- A cryptocurrency wallet connected to the internet, typically a software application (MetaMask, Coinbase Wallet). Hot wallets are convenient for DeFi interactions but more vulnerable to remote hacking than cold (hardware) wallets. Best practice: keep only small amounts in hot wallets.
- How does Hot Wallet work in practice?
- A hot wallet keeps keys on an internet-connected device. Convenient for regular use, and permanently exposed to whatever else that device is exposed to.
- Can you give an example of Hot Wallet?
- A browser extension wallet signs transactions in seconds — ideal for day-to-day activity, and holding no more than you would carry in a physical wallet.
- What do people get wrong about Hot Wallet?
- Malware, malicious extensions and phishing all target hot wallets. The usual discipline is a hot wallet for activity and cold storage for holdings, with the two never sharing a seed.