Glossary
What is a hot wallet?
In one sentence
A hot wallet is any crypto wallet connected to the internet — convenient for spending, more exposed to attack.
“Hot” simply means online. Phone wallets, browser extension wallets and exchange balances are all hot wallets. They are designed for frequent use: opening them takes seconds and sending a transaction is quick.
The trade-off is exposure. Because the keys exist on an internet-connected device, they can in principle be reached by malware, a malicious browser extension, or a phishing site that tricks you into signing something. The device is only as secure as the machine it runs on.
The standard approach is to treat a hot wallet like the cash in your pocket: useful, but not where you keep everything. Hold day-to-day amounts there and keep larger balances in cold storage.
For example
A browser extension wallet you use for DeFi is a hot wallet; assume anything in it could be lost to a bad signature.