Hot Wallet
A wallet whose private keys are held on an internet-connected device.
✦ Key Insight
Convenience and exposure are the same property here. Hot wallets are the right tool for active use and the wrong place for long-term holdings.
✕ Common Misconceptions
Letting a hot wallet accumulate a large balance because it is convenient. Also leaving old token approvals active — a compromised contract can drain a hot wallet without touching the seed phrase.
Detailed Explanation
In Practice
Dig Deeper
Wallet
Software or hardware that stores your private keys and lets you sign transactions.
Token
An asset created by a smart contract on an existing blockchain rather than being that blockchain's native currency.
Blockchain
A shared, append-only record of transactions maintained by many independent computers at once.
Transaction
A blockchain transaction is a signed or authorized instruction that changes blockchain state or transfers value when accepted by the network.