Hot wallet

A hot wallet is a crypto wallet connected to the internet. You can use it to store, receive, and send crypto.

What is a hot wallet?

A hot wallet is usually an app, browser extension, or wallet provided by a crypto exchange. Well-known examples include MetaMask, which is widely used on Ethereum, and Phantom, a popular wallet on Solana. Because a hot wallet is online, you can access your crypto quickly.

A wallet works with keys. The public key is like an account number: other people can use it to send you crypto. The private key is secret and gives access to your crypto.

With a hot wallet, private keys are stored on a device connected to the internet. This makes a hot wallet more vulnerable to hacks, malware, and phishing. With some wallets, the provider manages the private keys for you.

An example of a hot wallet

Say you have crypto on a crypto exchange and want to send some of it to someone. You open the app, enter the recipient's address, and send the crypto right away.

This is a hot wallet because it's online and readily available. That's convenient for regular use, but the internet connection also comes with extra risks.

Why are hot wallets important in crypto?

Hot wallets often come up in news about crypto exchanges, wallet apps, and security. Reports of hacks, malware, or phishing can affect users of online wallets.

It's important to know who manages the private keys. If a provider manages them, you don't have full control over your crypto.

A hot wallet is especially useful when you want to use crypto quickly. That doesn't mean it's the safest choice for large amounts, because it's online.