Hot Wallet
In short: A hot wallet is an online cryptocurrency wallet: its private keys are kept on a device or server that is connected to the internet.
A hot wallet is an online cryptocurrency wallet: its private keys are kept on a device or server that is connected to the internet. Mobile apps, browser extensions and desktop wallets are common examples, and exchanges run hot wallets of their own.
Why it matters
Being online makes a hot wallet fast and convenient: it can send a payment, sign a DeFi transaction or process a withdrawal within moments. The same connection is its weakness, because malware, phishing sites and hacked servers can reach keys that live on a connected device. That is why hot wallets are commonly used for everyday amounts, while larger holdings sit in cold storage. Exchanges follow a similar pattern, keeping a working balance hot to pay out withdrawals and refilling it from reserves.
Example
A user installs a wallet app on their phone and writes down its seed phrase. They keep a small balance in it for payments and trading, which they can send in seconds. Their long-term savings stay on a hardware wallet that only connects when a transaction needs signing.