Hot wallet
A hot wallet is an app on a phone, computer or browser where the keys live on a device that is online. Convenient for everyday amounts and for connecting to services, and less safe than cold storage for exactly that reason.
How it works
The key sits encrypted in the device's storage, and a password or biometrics unlocks it. Signing happens on the same machine you are working on, which is why everything takes seconds.
That is also the attack surface. A malicious extension, an infected computer or a phishing site all touch the same device and the same key. Nothing physical separates your confirmation from someone else's code.
For DeFi a hot wallet is effectively required: connecting to services, approving permissions and trading from a cold device every time is impractical. The answer is splitting the money, not avoiding hot wallets.
How to use one safely
- Keep only what you can loseA hot wallet is pocket money. The main holdings live somewhere else.
- A separate wallet for unfamiliar sitesConnections, airdrops and testnets all go through a wallet holding nothing of value.
- Revoke approvals regularlyEvery DeFi connection leaves a live right to spend your tokens. The list is worth reviewing every couple of months.
- Install extensions only from official storesFake wallet extensions are a standard scheme. Check the publisher and the install count.
- The phrase does not live on the phoneA screenshot of a seed phrase syncs to the cloud automatically. It is the most common way to lose everything at once.