Hot storage, also known as a hot wallet, refers to a method of storing cryptocurrency where the private keys are kept online and connected to the internet. It is a type of crypto wallet that can be either an application or web/cloud-based platform, accessible via computer, mobile device, or the cloud. Hot storage is commonly used for its convenience, allowing immediate access to funds for transactions. This makes it a popular choice for crypto exchanges and platforms that require quick and easy access to cryptocurrencies.
However, the online nature of hot wallets also makes them more vulnerable to cyber threats like hacking and malware. Since they are continuously connected to the internet, the private keys stored within these wallets can be at risk of unauthorized access and theft. To mitigate these risks, hot storage solutions often employ additional security measures like multi-factor authentication and encryption. Despite these precautions, hot wallets are inherently less secure than cold storage options, which store private keys offline. Hot storage is best used for smaller amounts of cryptocurrency or for assets that need to be readily accessible for frequent transactions.