Hot wallet
A crypto wallet with its private keys on an online device or server: quick to use, but more exposed to attackers.
Any wallet whose private keys live on an internet-connected device or server counts as a hot wallet. Mobile and browser wallets fall in this category, as do the wallets that casinos and exchanges use to send out withdrawals.
How casinos use them
A casino holds only a portion of its reserves in hot wallets so it can pay out fast, and parks the remainder offline in cold storage. When the hot wallet runs dry, a big withdrawal may sit until staff refill it by hand from cold storage. That is a common and legitimate cause of delay on large crypto payouts.
The flip side: hot wallets are what attackers usually go after when a casino or exchange is hacked. An operator keeping most player money hot is gambling with your balance.
Protecting your own coins
- A phone-based self-custody hot wallet is fine for small sums you intend to spend.
- Move bigger holdings to a hardware (cold) wallet.
- Store your recovery phrase offline. Never enter it on a website, and never give it to a support agent.