A hot crypto wallet is a mobile, desktop or online application for storing digital assets, receiving and sending payments. The advantage of such services is that they allow quick and easy operations and are perfect for everyday transactions. Disadvantage — such solutions provide a lower level of crypto wallet security than a cold storage crypto wallet. Therefore, they are not recommended to be used to store large amounts.
Peculiarities of work
Alternative currency systems, such as cryptocurrency, provide high levels of user anonymity and flexibility in financial transactions. However, there are many fraudsters whose activities are aimed at stealing private keys from users’ wallets. Investors are faced with the choice of how to store their coins, autonomously or with an Internet connection.
The best safety choice is to combine hot and cold wallets.
The functionality of hot wallets facilitates transactions between users who hold small amounts of cryptocurrency. But this option is more likely to face security threats.
How a top hot crypto wallet works:
- The service does not store virtual currencies, but keys for authorization and digital signature of transactions.
- To make a payment, the wallet connects to a web server and initiates a specified action.
- The program connects to the blockchain, sends the transaction data and then responds to the fact that it is included in the block.
- The transaction details are then copied to all nodes of the cryptocurrency network (the entry becomes public).
Security largely depends on the user’s own actions. Open and private keys, as well as login, password, PIN code, and other verification data, must be stored in a safe place; falling into the wrong hands implies that the wallet storing the cryptocurrency is broken and the means vulnerable.
It is advisable for the investor to keep only a small part of the assets in a hot wallet, and for the rest to move to cold wallets until they are needed. By the way, the accounts of crypto exchange markets are also in the hot wallets category, only castodial — this means that they do not allow the user to keep his or her keys, but take on this responsibility.
Types
Two basic parameters are used for the classification — platforms on which the service works (there are mobile, desktop, online solutions), as well as the need to load all the blockchain for proper functioning.
| Lightweight | A full copy of the blockchain on the computer is not required; it communicates with other servers. This option is considered less safe, but more convenient. |
| Full | Uploads a full copy of the chain (for Bitcoin, for example, it is more than 350 GB of data). This allows it to communicate with third-party servers to a minimum, thus reducing the risk of data interception. The best known of these variants is the Bitcoin Core. |
Mobile
Such applications are convenient for those who are often on the road or just outside the house. They are as functional as the PC versions. Examples of top hot crypto wallets that can be installed on an iOS or Android device. So, best hot crypto wallets for IPhone:
- Trust Wallet.
A lightweight crypto wallet that is under the control of the top cryptocurrency exchange market, Binance DEX. It is a crypto wallet with a card, with the help of which one can buy assets for fiat currency with VISA/Mastercard.
- Coinomi. One of the most technologically advanced wallets for mobile phones. This hot crypto wallet allows to work completely anonymously, supports dynamic commissions for transactions, allows to work with decentralized applications through the built-in dApps browser.
- Trustee Wallet. The service quickly became popular in the CIS countries, thanks to the support of such fiat currencies as RUB, UAH, KZT. One can buy cryptocurrency from a bank card, as well as put it on a card through embedded exchangers. According to the developers, their application is «safer than the Swiss bank».
Desktop
Such programs must be installed on a personal computer or laptop in order to work with them. They have wide functionality and high safety. The key for the user is to ensure the safety of the device itself so that the key file is not stolen or damaged by Trojan programs and viruses.
Examples of applications for Windows, Linux, macOS:
- Exodus. Provides convenient tools for managing the investment portfolio and controlling the asset ratios in it, internal exchange of cryptocurrency. Exodus has also recently become a public company (released on IPO) and produces the EXIT token, which is equivalent to holding shares.
crypto wallet Exodus
- Atomic Wallet. A multi-platform lightweight crypto wallet with the possibility to exchange coins, buy them from a dollar card, and receive a cashback with the help of a native token AWC. It is possible to earn money and earn cryptocurrency by staking (Solana, Tezos, Cosmos, Tron, etc.).
- Jaxx. The application also gives an opportunity for the acquisition of digital assets through a bank card and the exchange of one to another through an integrated exchanger. Additionally, it includes a block browser where one can track transactions on all major coins.
Web-versions
There are cryptocurrency storage services that do not need to be downloaded at all. It is enough to go to the site, create an account and log in. All functionality is available online — sending, receiving cryptocurrencies, exchanging and buying assets, as well as additional options if they exist — staking, crypto loan and crypto flash loans, mining pool, decentralized finance. Examples of online hot storage crypto wallets:
- Guarda
- Blockchain.com
- Coinfy
- MyEtherWallet
In addition, such wallets may include the accounts of the castodial crypto exchange markets: Binance, EXMO, FTX, Gate.io, Kraken.
Conclusion
The best advice is to combine best hot crypto wallets and top cold crypto wallets, choosing in each case the best option. For example, it is possible to store assets that are constantly traded on a stock exchange market or in an online wallet. If it is a long-term, large-scale investment, it is necessary to consider cold storage — besides expensive hardware, it can also be a free paper wallet. In any case, hot wallets play a crucial role in crypto sphere and are in the greatest demand among the general public.