A hot wallet, or software-based crypto wallet, is a digital wallet that is typically connected to the internet. It comes in the form of an application installed on devices such as smartphones or laptops. Its main characteristic is that the seed phrase and private key are generated and stored online, which makes transactions easy and fast to execute.
However, because it is constantly connected to the internet, a hot wallet carries a higher security risk. If the seed phrase and private key have ever been stored online, there is a possibility that they may no longer remain fully confidential. Even so, hot wallets are still widely used, especially by beginners, due to their convenience and ease of access.