Hot Wallet
Candlefocus EditorHot wallets are connected to public and private keys, which are strings of alphanumeric characters used to identify users and enable the transfer of tokens securely. Public keys are sequences of numbers and letters that are publically visible, allowing peers to identify users and send them tokens. Private keys also exist, but they should remain confidential as they act as a password to access funds and facilitate transactions.
Hot wallets differ from cold wallets in that they are constantly connected to the internet. Cold wallets are those forms of storage where funds are stored offline and cannot be accessed until they are physically connected to a computer or another piece of hardware. Due to its convenience, hot wallets are more widely used, however because they are more susceptible to hacks and malware they are more vulnerable than cold wallet solutions.
Despite the extra risk, hot wallets have many benefits. Firstly, they allow users to rapidly send and receive funds without having to connect a hardware wallet. Secondly, they can be used on multiple computers or mobile devices, allowing users to access funds on the go. Thirdly, hot wallets usually support multiple currencies, whereas hardware wallets usually only support a specific currency or token.
In conclusion, hot wallets are digital wallets that are linked to the internet. They are useful for their convenience, however come with a certain level of vulnerability due to their connection to the internet. Private and public keys must be managed securely to ensure wallet security, and users should never leave large balances stored in their hot wallet.