Hot Wallet
Quick Answer
A hot wallet is an internet-connected cryptocurrency wallet for frequent transactions. Payment processors use hot wallets for operational liquidity needed for daily settlements.
Full Definition
A hot wallet is a cryptocurrency wallet connected to the internet, enabling quick and convenient access for frequent transactions. Hot wallets include browser extensions (MetaMask), mobile apps (Trust Wallet), and exchange wallets. Payment processors use hot wallets for operational liquidity — the portion of funds needed to process daily settlements. Hot wallets are faster but less secure than cold wallets, so best practice is to keep only operational amounts in hot storage.
Related Terms
Hardware Wallet
A hardware wallet is a physical device that stores cryptocurrency private keys offline, providing maximum security. Leading examples include Ledger and Trezor.
Hash
A hash is a fixed-length string from a cryptographic function used as a unique transaction identifier. Transaction hashes are used to track and verify payments on block explorers.
HTLC (Hash Time-Locked Contract)
An HTLC is a smart contract requiring payment acknowledgement within a set time window, enabling trustless cross-chain swaps and payment channels like Lightning Network.