Overview
Hot wallets are software-based and can take the form of mobile apps, desktop programs, or browser extensions. They are convenient for frequent trading and daily use.
Pros and Cons
- Pros: High accessibility, easy to set up, often free.
- Cons: Vulnerable to online hacks, malware, and phishing attacks because the private keys are stored on an internet-connected device.
Best Practices
Only keep small amounts of 'spending money' in a hot wallet and use cold storage for long-term holdings.