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What does a hot wallet mean (what are the different types of hot wallets)?

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A hot wallet refers to a \”Smart Wallet\” in English, according to BitcoinExchang

What does a hot wallet mean (what are the different types of hot wallets)?

A hot wallet refers to a “Smart Wallet” in English, according to BitcoinExchangeGuide. Generally, “smart” means that users can make transfers through mobile applications. A software wallet that utilizes blockchain is a good example.

When using cryptocurrency and needing to pay fees, many users have used this system. Therefore, to better understand this technology, we should pay special attention to security when using hardware wallets. So, what does “hot” mean? It is a cryptographic principle and a commonly used email address.

What are the different types of hot wallets?

A hot wallet is an encryption hardware device used to store and trade digital assets. Currently, there are two main types of hot wallets in the market: cold wallets and hot custodians (HotStuff). In general, hot wallets have multiple functions, such as serving as a launch node or backup for smart contracts, managing private keys and account recovery with passwords, encrypting external data, and receiving funds like other cryptocurrency wallets.

In traditional financial products, users often transfer their fiat currency from their bank accounts to cold storage to preserve their digital balances. Therefore, hot wallets can also be seen as a decentralized wallet solution. These wallets not only securely store users’ personal information and protect their assets but also allow users to directly send and receive cryptocurrencies. Because hot wallets do not have any third-party control, they are often confused with Bitcoin, as both cryptocurrencies are owned by custodians. However, as blockchain technology progresses, more and more customers are starting to accept the possibility of this idea.

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