Hot wallet
A hot wallet is a crypto wallet that is connected to the internet, such as an app on a phone or computer. It is convenient when you move crypto often. The trade-off, as the SEC notes, is exposure to cyber threats like hacking and phishing.
What counts as a hot wallet?
The defining feature is the connection. If the keys live on a device or in software that is online, the wallet is hot. Common forms include mobile wallet apps, desktop wallet programs and browser extensions that connect to websites.
Its opposite is the cold wallet, which keeps keys offline. Both store keys rather than coins, as our wallet guide explains.
Why do people use hot wallets?
Speed and ease. You can check a balance, receive a payment or send crypto in seconds, without plugging anything in. For someone who transacts often, that convenience is the whole point. It is also why the risk is higher: anything that can reach the internet can be reached from it.
How can a hot wallet be emptied?
A typical pattern: a message promises a free token and links to a site that asks you to connect your wallet, then to approve a transaction or type in your recovery words. Once you approve, the transfer is signed with your own key. NIST notes that after stolen funds are moved, the transaction generally cannot be undone.
Malware on the device is another route. The wallet itself may be fine, while the computer around it is not.
What are the main risks of a hot wallet?
The SEC's custody bulletin describes hot wallets as connected to the internet and therefore exposed to cyber threats. Its practical tips include:
- Use strong passwords and multi-factor authentication.
- Watch for phishing messages and look-alike websites.
- Keep your holdings private.
- Never share private keys or seed phrases.
If a message pushes urgency or a free reward, check it against our scam red flags first.
Frequently asked questions
Is a hot wallet the same as keeping crypto on an exchange?
Not necessarily. With your own hot wallet, you hold the keys. On a platform, the platform usually holds them, which the SEC calls third-party custody. Different arrangement, different risks.
Should I keep all my crypto in a hot wallet?
That is a personal decision. The SEC frames the trade-off plainly: online wallets face cyber threats, while offline ones can be lost or damaged. Some people split holdings between the two.
Sources
- SEC, Crypto Asset Custody Basics for Retail Investors – Investor Bulletin (Dec 2025) — investor.gov (accessed 2026-10-02)
- NIST IR 8202, Blockchain Technology Overview (2018) — nvlpubs.nist.gov (accessed 2026-10-02)