Hot wallet
An online, network-connected wallet — used for liquid operations but with elevated theft risk vs. cold storage.
Stablecoin issuers run hot wallets sized for expected daily mint / redemption volumes; everything beyond that lives in Cold storage. The largest historical exchange hacks (Mt.Gox, Bitfinex 2016, Coincheck, FTX) all involved hot-wallet drainage.
Related terms
- Cold storageCryptographic key storage with no live network connection — the gold standard for long-term reserve safekeeping.
- MPC (multi-party computation)A cryptographic scheme letting multiple parties compute a signature without any one of them holding the full private key.
- Custody riskThe risk a custodian (bank, exchange, qualified custodian) loses, mismanages, or is denied access to reserves it holds.