What is a Hot Wallet?

A hot wallet is a cryptocurrency wallet connected to the internet, facilitating real-time transactions and frequent transfers.

Think of a hot wallet like a frequently used app that needs an internet connection to perform tasks. Because these wallets rely on online access for daily utility, they are exposed to remote risks such as phishing, malware, and unauthorized access, as noted by Cobo’s guide.

It is important to distinguish between a wallet’s connectivity and its custodial setup. Being “hot” simply refers to its internet connection; it does not dictate who controls the private keys or how the assets are managed. Whether you use a browser extension, a mobile app, or an exchange-hosted wallet, the specific setup depends on both its connectivity and how you manage your cryptocurrency holdings.