Hot Wallet
A cryptocurrency wallet connected to the internet, offering convenience at the cost of greater security exposure.
What is Hot Wallet?
A hot wallet is a cryptocurrency wallet that maintains an active connection to the internet. Hot wallets enable fast, convenient transactions because the private keys are available online and can sign transactions without physical interaction. Common forms include mobile apps (such as Trust Wallet), browser extensions (such as MetaMask), and exchange wallets provided by platforms like Coinbase or Binance. Because hot wallets are internet-connected, they face higher risk from phishing attacks, malware, exchange hacks, and smart contract exploits than offline cold storage. Hot wallets are best suited for holding smaller amounts intended for active trading or frequent spending, while larger holdings are typically moved to cold storage for long-term security.
Example
A DeFi trader using MetaMask to interact with Uniswap is using a hot wallet. The wallet is convenient for signing transactions in seconds but remains exposed to malicious dApps, browser vulnerabilities, and phishing sites. Security best practices recommend keeping only the amount needed for current activity in a hot wallet.
Source: Investopedia — Hot Wallet