Definition
A hot wallet is a type of cryptocurrency wallet that remains connected to the internet, allowing digital assets to be accessed, received, and sent in real time. It typically stores and manages the private key needed to authorize transactions on a blockchain while maintaining an online connection. Because it is networked, a hot wallet is considered more convenient for frequent transactions but inherently more exposed to hacking, malware, and other remote attacks than offline storage methods.
Hot wallets can exist as mobile apps, desktop applications, browser extensions, or web-based interfaces that interact directly with blockchain networks. They are often used as a primary interface for interacting with decentralized applications and services, with the wallet software handling the signing of transactions using the underlying private key. In contrast to a cold wallet, which keeps key material offline, a hot wallet prioritizes accessibility and speed of use over maximum isolation from online threats.
Context and Usage
In practice, a hot wallet functions as the online component of a broader asset storage strategy, frequently holding smaller, more actively used balances. The security of a hot wallet depends heavily on how its private key or seed phrase is generated, stored, and protected within an internet-connected environment. Compromise of the device, operating system, or wallet software can expose these secrets and allow unauthorized control over the associated funds.
The concept of a hot wallet is often discussed alongside a cold wallet to distinguish between online and offline storage approaches. A hot wallet still relies on the same cryptographic foundations as any other wallet, including the relationship between a private key, its derived public address, and any backup seed phrase. Its defining characteristic is not the cryptography itself but the continuous or frequent connectivity that makes it more suitable for day-to-day blockchain interactions and less suited to long-term, high-value storage.