Hot Wallet

What does hot wallet mean when discussing cryptocurrency?

A cryptocurrency wallet connected to the Internet

When a cryptocurrency owner says they have a "hot wallet," it means their crypto wallet is connected to or stored on the Internet. A hot wallet is less secure but often more convenient than cold storage.

What is a cryptocurrency wallet?

A wallet is a program cryptocurrency owners use to access and manage their coins. Each wallet is linked to a private key, which acts as the wallet's "address" for cryptocurrency transactions. When cryptocurrency owners conduct a transaction, coins are either routed to or taken from their wallets.

What's the drawback of a crypto hot wallet?

While using a hot wallet often makes it easier for cryptocurrency owners to access and use their coins, it also makes their cryptocurrency "accounts" less secure. For example, a wallet that is stored on a wallet company's web server and accessed via their website is easy to access from any computer. However, if a hacker were to gain access to the company's web server, they may be able to steal users' private keys and their cryptocurrency.

Example

"I store some of my incidental cryptocurrency in hot wallets, but all my Bitcoin's in cold storage."
It's important to verify that your hot wallet is secure

It's important to verify that your hot wallet is secure

Related Slang

Usage

Last Updated: May 12, 2021

Hot wallet definition

This page explains what the slang term "Hot wallet" means. The definition, example, and related terms listed above have been written and compiled by the Slangit team.

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