A hot wallet is a cryptocurrency wallet that is always connected to the internet. This lets you quickly send, receive, and check your digital money at any time. Many people use hot wallets for daily tasks like trading or making purchases with crypto because they are easy to use and fast.
Cryptocurrencies are not actually stored in the wallet. Instead, the wallet keeps the private keys you need to access your assets on the blockchain. A hot wallet stores these keys on a device or service that is always online. You use the private keys to approve transactions and connect with different blockchain networks whenever you need.
There are several kinds of hot wallets:
Hot wallets come in two types: custodial and non-custodial. Custodial wallets are managed by companies or exchanges that hold your private keys for you. With non-custodial wallets, you control your own private keys, so you are responsible for keeping them safe.
Hot wallets are popular because they let you access your crypto quickly and easily. If you trade a lot or need to send tokens fast, a hot wallet can help. Many also offer useful features like portfolio tracking and price alerts.
Being online makes hot wallets more open to attacks from hackers or malware. Because your private keys are connected to the internet, thieves may try to steal them if proper precautions are not taken. For this reason, hot wallets are usually used for smaller amounts of cryptocurrency that you plan to use soon. Larger amounts are often moved to offline storage (called cold wallets) for added safety.
People use hot wallets when they need fast and frequent access to their crypto. Whether you are trading, using DeFi apps, or making payments, hot wallets make things easier by skipping the extra steps that offline wallets need.
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