Hot Wallet
A hot wallet is a crypto wallet whose private keys live on a device connected to the internet, such as a phone app, a browser extension or an exchange's online server. It is convenient for frequent use but more exposed to attacks.
What makes a wallet hot
The word refers to where the keys are, not where the coins are. Coins always live on the blockchain. A wallet is hot when the keys that can move those coins sit on a device or server that is online, so a transaction can be signed instantly.
Hot wallets can be non-custodial, like a mobile wallet or browser extension where you hold the seed phrase, or custodial, like the online wallets exchanges use to process customer withdrawals.
Why people use them
They are free or cheap, quick to set up, and ideal for everyday actions: paying, trading, connecting to DeFi apps, minting NFTs. A common setup is a hot wallet with a small spending balance and a cold wallet or hardware wallet holding long-term savings, similar to carrying a little cash in your pocket and keeping the rest in a safe.
How hot wallets get compromised
Because the keys sit on an online device, anything that compromises that device can compromise the wallet. Malware can read files or swap copied addresses. Fake browser extensions and app-store clones steal seed phrases. Phishing sites trick users into signing approvals that let a wallet drainer move tokens. A seed phrase saved in a cloud note or screenshot can leak through a hacked account.
Exchanges' hot wallets are also a target. Many of the largest exchange hacks in crypto history drained hot wallets, which is why exchanges keep most customer funds in cold storage.
Reducing the risk
Keep only what you need for near-term use in a hot wallet. Install wallets only from the developer's official links, keep the device updated, never store the seed phrase digitally, use separate wallets for experimenting with new apps, and review and revoke token approvals you no longer need. For larger amounts, many people add a hardware wallet so the keys never touch the online device.
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Frequently asked questions
Is MetaMask a hot wallet?
Yes. Used on its own, MetaMask stores keys in your browser or phone, which are connected to the internet. Paired with a hardware wallet, the keys stay on the device instead.
Is a hot wallet safe for large amounts?
It is the most exposed type of wallet. Many people use hot wallets for daily amounts and keep larger holdings in cold storage.
What is the difference between a hot and a cold wallet?
A hot wallet keeps the private keys on an online device; a cold wallet keeps them offline, so they cannot be reached over the internet.
Related terms
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