Security
Hot Wallet
A cryptocurrency wallet connected to the internet, allowing quick access for transactions. More convenient but less secure than cold wallets.
Last updated: January 5, 2025
What is a Hot Wallet?
A hot wallet is a cryptocurrency wallet that’s connected to the internet. This includes mobile apps, browser extensions, and desktop applications. They’re “hot” because they’re always online and ready to transact.
Hot vs Cold Wallets
| Feature | Hot Wallet | Cold Wallet |
|---|---|---|
| Internet | Connected | Offline |
| Convenience | High | Lower |
| Security | Lower | Higher |
| Cost | Free | $60-250 |
| Best for | Daily use | Storage |
Types of Hot Wallets
Browser Extensions
- MetaMask
- Rabby
- Phantom (Solana)
Access DeFi directly from browser.
Mobile Apps
- Trust Wallet
- Coinbase Wallet
- Rainbow
Trade on the go.
Desktop Applications
- Exodus
- Electrum
- Atomic Wallet
Full-featured software.
Exchange Wallets
Popular Hot Wallets
| Wallet | Type | Best For |
|---|---|---|
| MetaMask | Browser/Mobile | Ethereum, DeFi |
| Phantom | Browser/Mobile | Solana |
| Trust Wallet | Mobile | Multi-chain |
| Rabby | Browser | Better UX |
| Coinbase Wallet | Mobile | Beginners |
Hot Wallet Security
Risks
- Malware can access keys
- Phishing attacks
- Device theft
- Software vulnerabilities
Protection Measures
- Strong device security
- Updated software
- Careful with links
- Review transactions
Best Practices
Do’s
- Keep software updated
- Use strong device password
- Enable 2FA where available
- Verify all transactions
- Only install from official sources
- Backup seed phrase offline
Don’ts
- Store large amounts
- Click suspicious links
- Install unknown extensions
- Share screen with seed visible
- Use on public WiFi for large transactions
How Much to Keep in Hot Wallet
General Guidelines
- Trading amount only
- What you can afford to lose
- Rest in cold storage
Example Split
- Hot wallet: $500-2,000 for DeFi/trading
- Cold wallet: Long-term holdings
- Exchange: Active trading only
Setting Up a Hot Wallet
MetaMask Example
- Download from metamask.io (verify URL!)
- Create new wallet
- Write down seed phrase
- Store seed offline securely
- Set strong password
- Start using
First-Time Tips
- Practice with small amounts
- Learn to verify transactions
- Understand gas settings
- Don’t rush
Hot Wallet for DeFi
Why Needed
- Connect to dApps
- Sign transactions
- Interact with smart contracts
- Manage NFTs
Connection Safety
- Verify site URLs
- Revoke unused approvals
- Be cautious of pop-ups
- Use separate browser profile
Exchange Wallet Considerations
Convenience
- No setup needed
- Easy trading
- Managed security
Downsides
- Not your keys
- Can be frozen
- Exchange hack risk
- Withdrawal limits
When to Use Hot Wallets
Good For
- Daily transactions
- DeFi interaction
- Small amounts
- Active trading
- NFT purchases
Not Good For
- Large holdings
- Long-term storage
- Maximum security needs
- Amounts you can’t afford to lose
Backup and Recovery
Seed Phrase
- 12 or 24 words
- Never store digitally
- Multiple physical copies
- Test recovery process
If Phone/Computer Lost
- Get new device
- Download wallet app
- Restore with seed phrase
- Assets recovered
Ready to Start Trading?
Now that you understand hot wallet, explore the best exchanges to begin your crypto journey.