Hot Wallet

A hot wallet is any wallet whose private keys are held on an internet-connected device. Browser extensions like MetaMask, mobile apps like Phantom, and exchange accounts are all hot wallets. They are easy to use: you can swap tokens, mint NFTs, or send a payment in seconds without plugging in a device.

The convenience comes with exposure. Malware on the computer, a malicious browser extension, a fake website that tricks you into signing a harmful transaction, or a bug in the wallet software can all lead to theft. Exchanges themselves keep most customer funds in cold storage and only a small operating balance in hot wallets precisely because hot wallets are the part that gets hacked.

A common approach is to keep a small amount in a hot wallet for daily activity, similar to cash in a pocket, and hold the majority in a cold wallet. Using a separate browser profile or device for crypto, and reviewing every transaction before signing, reduces hot wallet risk further.