Hot wallet
In short A hot wallet is a crypto wallet whose private keys are accessible from an internet-connected device, like a phone app or browser extension.
A hot wallet is a crypto wallet whose private keys are accessible from a device connected to the internet. That usually means a browser extension, a mobile app, or a desktop program. It is the kind most people use to buy and trade small tokens on Solana, BNB Chain, Base, and Ethereum, because it works with decentralized exchanges and apps in a couple of clicks.
In a typical self-custodial hot wallet, the private key, or the seed phrase that generates it, is stored on your device in encrypted form and unlocked with a password or biometrics. Some hot wallets use other designs, such as keys split across several parties, but in all of them signing happens on a connected device. Three actions are worth keeping apart. Connecting to a site only shares your public address and moves nothing. Signing a message proves you control the address and usually costs no gas. Signing a transaction, including a token approval, is what actually changes things on the chain. The blockchain never sees your key, only the signatures.
The tradeoff is that the key lives on a machine that also runs a browser, opens links, and downloads files. Common ways people lose funds from a hot wallet include a fake site that asks you to sign something harmful, a malicious token approval that lets a contract pull your tokens later, malware on your computer, or a seed phrase typed into a fake support form. Anyone who gets your seed phrase controls your funds, no matter where they are.
A few habits cut much of that risk. Keep only what you plan to trade in the hot wallet and move the rest to a cold wallet. Use a separate wallet, with its own seed phrase, for trying new or unknown tokens. Write the seed phrase down offline, never photograph it or store it in cloud notes, and never type it into a website. Read what a request actually does before you sign it, and bookmark the sites you use.
Also revoke token approvals you no longer need, especially for contracts and tokens you have stopped using. A block explorer's approval checker or a dedicated revoke tool will list them, and revoking costs a small gas fee. Finally, an account on an exchange is not a hot wallet in this sense, because the exchange holds the keys.