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What is a Hot Wallet?
What is a Hot Wallet?

Introduction to a Hot Wallet and what it is within the Rehive context

C
Written by Connor Macdougall
Updated over 4 years ago

General definition

In the crypto space, a Hot Wallet is an account/wallet that is exposed to the outside world via an external connection like the internet. This is usually required because the wallet needs to sign transactions automatically. This means that the Hot Wallet's private key is at a higher risk of being exposed compared to other wallet types.

Rehive Hot Wallet

Within the Rehive context, the Hot Wallet is an account (private key) stored securely on our servers which are used to sign transactions on behalf of company users. It can be seen as the companies transactional account or float.

Practically this means that whenever a user sends money out on-chain via any wallet or API call the company Hot Wallet is the actual cryptocurrency wallet making that on-chain transaction.

Risks

  • The Hot Wallet is the highest risk account and should always store the minimum amount of value needed on it to remain operational.

  • If there is a data or server breach it is possible for an attacker to gain access to the private key of the wallet.

  • Due to the automatic nature of the transaction signing on behalf of users it would be the primary target for exploitation and scams.

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