仮想通貨に関する用語集(CRYPTO GLOSSARY) H行

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Halving

Halving in crypto is an event that occurs in certain cryptocurrencies, such as Bitcoin, to reduce the rate of issuance of new coins and maintain scarcity.

What does Halving Mean in Crypto?

In the world of digital currencies, halving is a term used to describe a unique process that aims to regulate the release of new coins into circulation. In essence, halving refers to a scheduled event where the rewards given to miners for successfully validating a block are cut in half.

This practice is designed to ensure that the cryptocurrency in question will experience a gradual and steady release of new tokens until it reaches its maximum supply.

in the case of Bitcoin, new coins are produced as part of a process called mining. This involves validation of new blocks, with miners receiving compensation in the form of newly created BTC. To ensure a gradual reduction in the block rewards, the halving occurs every 210,000 blocks, or roughly every four years, resulting in a 50% reduction.

The block reward was initially set at 50 BTC and has since been reduced to 25 BTC in 2012, then to 12.5 BTC in 2016, and then to 6.25 BTC in 2020. After 32 halvings, the maximum supply of 21 million BTC will be reached, and the process of creating new Bitcoins will come to an end.

Why Does Bitcoin Halving Happen?

Bitcoin mining uses crypto algorithms, processing power, and a proof-of-work consensus mechanism to solve complicated mathematical problems to verify new transactions in the network. For this effort, Bitcoin blockchain rewards miners with new crypto coins or block rewards. Bitcoin’s mining algorithm is designed to search for new blocks roughly every 10 minutes.

As more miners join the network and add more computing power, the time required to find new blocks decreases.

To maintain a 10-minute block time target, the mining difficulty is adjusted. With a limited supply of 21 million units, the generation of new BTC will cease once the maximum number has been reached. To gradually reduce the number of BTC produced, it undergoes these halving events. This makes Bitcoin more scarce and valuable, reinforcing its position as a valuable digital currency.

Hard Cap

A hard cap is the maximum number of tokens that a cryptocurrency project can ever produce.

What is the Meaning of Hard Cap?

A hard cap is the maximum number of tokens that can be produced in a given cryptocurrency. It is set in the code of a blockchain to keep the supply of tokens to a definite number. This capped supply prevents the minting of new tokens into circulation. This mechanism is designed to prevent inflation and shore up a cryptocurrency’s market price. Bitcoin has its hard cap set to 21 million tokens, and the coins have to be mined over several years before the maximum supply is attained. The hard cap is one of the features that differentiates cryptocurrencies from fiat and other precious minerals.

The amount of Bitcoin that will ever be in circulation is certain, while the same cannot be said for the dollar or gold. It is a parameter in the cryptocurrency’s code and to modify it, the developers have to change this parameter. This will likely result in the creation of a new cryptocurrency.

A bug could also change the hard cap of a cryptocurrency. This happened with Bitcoin’s inflation bug in 2010. The ‘integer overflow bug’ allowed an attacker to mint 184 billion Bitcoins temporarily before developers on the blockchain rectified the problem.

In the context of initial coin offerings (ICO), which new blockchains use as a funding strategy, the hard cap is used to set a limit on the maximum number of tokens that can be sold. Soft cap is the minimum amount of funds that can be raised during an ICO.

Hard cap helps to maintain a token’s value while the soft cap ensures that the blockchain does not raise excessive funds that lead to financial instability.

Hard Fork

A hard fork is a significant change that permanently splits a blockchain into two different networks when the nodes fail to reach a consensus.

What is a Hard Fork in Crypto?

A hard fork (often used as one word, “hardfork”) is a protocol software upgrade that permanently splits a blockchain network into two separate chains. It occurs when nodes on the newest version of the protocol fail to accept the older version of the blockchain. 

Technically, modifying the blockchain forces all the nodes to comply and upgrade to the newest version of the protocol. However, some continue along the old path. This lack of consensus results in the upgraded protocol being permanently split from the previous version. It also leads to the invalidation of previously valid transactions and blocks, and vice versa.

Two things can happen when a blockchain undergoes a hard fork:

1. The hard fork creates another crypto asset when the cryptocurrency’s community fails to reach a consensus. For example, in August 2017 Bitcoin Cash (BCH) was formed in response to Segregated Witness (SegWit) when the Bitcoin community failed to reach a consensus to increase Bitcoin’s block size.
2. One of the crypto assets formed from the hard fork may virtually disappear in the case an upgrade is unanimously supported by the community. Hence, the crypto asset that lost community support disappears. For example, the Ethereum community unanimously supported the Byzantium hard fork, leading to only a single crypto as a result.

Examples of a Hard Fork in Crypto

Hard forks occur when blockchain developers are:

• Trying to maintain an existing code that cannot be updated.
• Fixing security hurdles.
• Attempting to roll back transactions to reverse a hack on the network.
• Adding new functionality or features.
• Resolving conflict among the developers.
• Revising mining rewards or the fee structure.

For example, the Ethereum community proposed a hard fork to reverse a hack on the DAO (Decentralized Autonomous Organization) project, which claimed crypto worth tens of millions of dollars of DAO token holders’ funds. A newer version of the network was created with newly formed smart contracts that enabled the original owners of the stolen crypto to recover their funds.

The older version of the network was renamed Ethereum Classic, while the newer version retained the original name, Ethereum.

What is the Difference Between a Hard Fork and Soft Fork?

Hard forks and soft forks are similar processes with different results. A soft fork is performed when forward and backward compatibility is possible. This means that the new version can still communicate with the old version of the software. 

In hard forks, nodes stop processing blocks following the introduction of new rules, that is, upgraded nodes stop communicating with non-upgraded nodes. With hard forks, networks do not maintain backward compatibility. 

 

Hardware Security Module (HSM)

A Hardware Security Module (HSM) is a hardware unit that safeguards and manages cryptographic keys.

What is a Hardware Security Module (HSM)?

A Hardware Security Module (HSM) is a physical computing device that stores and secures secret keys. HSM devices are often used to prevent unauthorized access to sensitive information such as users’ identities, transactions, and application servers. HSMs typically perform encryption, decryption, authentication, key management, and digital signing.

HSM are:

• Tamper-resistant: Hardware Security Modules are difficult to modify or alter without making the device inoperable.
• Tamper-evident: Attempts to log in or tamper with HSMs leave behind visible signs or send an alert notification.
• Tamper-responsive: HSMs may respond to tampering by deleting the secret keys stored in the device. This prevents a malicious actor from accessing a user’s sensitive information.

How are they relevant to digital assets?

Your private keys are stored in your wallet and control access to your cryptocurrency funds (which are always stored on the blockchain). HSM devices are ideal for crypto wallets since they ensure that private keys never leave the device. The private keys are typically used to sign transactions. And since the private keys live inside the HSM device, the HSM becomes the sign for the transactions. Therefore, backing up private keys and recovery phrases in HSM-based solutions makes them virtually impossible to compromise. 

There are several types of HSMs – the static HSM and the nomad type. The static type comes as an external device or card that can be plugged to a network server. The nomad HSMs are basically the Secure Element, used in SIM cards, passports, banking cards and in some hardware wallets.

HSM Use Cases

HSMs are used in crypto wallets to store and manage users’ private keys and recovery phrases. It is also utilized in debit card PINs and Public Key Infrastructure (PKI) environments, among others.

• Debit Card Pins for ATMs: Payment and transaction HSMs are designed to secure a user’s payment card information and personal details during transaction processing. Hence, when a user conducts a transaction, the banks verify their PIN using HSM devices without revealing the PIN itself. To some extent, your banking card itself is a HSM.
• PKI  environments: Hardware Security Modules are primarily used to randomly generate, hold and manage public keys and private keys, and ensure that sensitive data is highly protected. For instance, HSM may be used to sign certificates, ensuring that malicious actors cannot authenticate themselves without the private key even if they get ahold of the certificate.

Hardware Security Modules bring an extra layer of security to sensitive information and application servers. In addition, it introduces a high degree of reliability, trust, and verifiability in hardware wallets.

Hardware Wallet

A hardware wallet is an external, physical device designed to securely store a user’s private keys offline.

What is a Crypto Hardware Wallet?

No matter what type of wallet you use, your cryptocurrency is always stored on a blockchain. Hence, wallets do not truly store your crypto but rather provide access to them. And whoever has the right private keys can access the assets. This narrows it down to securing your private keys, which are typically stored within the crypto wallet and must be kept safe to prevent unauthorized access of your assets.

A hardware wallet, in the context of cryptocurrency, is a physical device specifically designed to enhance the security of your private keys by storing them offline.  The main idea behind hardware wallets is to isolate your private keys from your easy-to-hack smartphone or computer – basically anything that can expose your private keys on the internet. 

Self-Custody and Wallets

Hardware wallets empower users to self-custody their assets by providing a secure infrastructure for managing the private keys. This not only enhances security but also aligns with the fundamental principles of decentralization and sovereignty that underpin the cryptocurrency ecosystem. With hardware wallets, users have the freedom to transact, store, and secure their assets independently. This puts them firmly in charge of their crypto journey and reduces their exposure to the risks associated with centralized custodianship.

On the other hand, exchange wallets operate differently in terms of custody. When you hold your cryptocurrencies on an exchange, you typically do not have direct access to the private keys associated with your assets. Instead, the exchange itself retains custody of the keys on your behalf.  If the exchange is hacked, goes bankrupt, or becomes insolvent, there is a risk that your assets may be lost or compromised.

Software wallets give you custody of your assets but they store the private keys online. Since they are connected to the internet, malicious actors can exploit vulnerabilities in the user’s operating system or the wallet software itself. Hackers can gain unauthorized access to the private keys and subsequently steal the funds. 

Hash

A hash is a unique string of text created by mapping a piece of data through a mathematical function to encrypt and secure the data against alteration or unauthorized access.

What is Hashing in Crypto?

Hashing is the process of transforming any type of data into a unique string of fixed-length text, usually composed of a combination of hexadecimal characters (0 – 9 and a – f). Data is hashed by passing a plaintext through an algorithmic function. The output value, called the hash value, is unique and deterministic (the same input will always produce the same output). Any slight change in the input will produce a completely different output.

Cryptographic hash functions (CHF) are designed to enable users to verify whether the input has been tampered with by comparing the hash values of the original plaintext with the transformed data. CHF are irreversible, which makes it impossible to derive the original plaintext from the hash value. This makes them ideal for securing sensitive information, such as private keys and passwords, so that even when the hash value is compromised, the original data remains protected.

In practice, this function play a major role in cybersecurity mechanisms and cryptocurrencies. They are fundamental in blockchain computations to allow faster and more secure data processing.

Hash Function in Blockchain

Hashing is used to improve the processing of blockchain transactions while upholding their integrity. Each block in the chain contains a hash value representing the data in that block, as well as the hash value of the previous block. 

For instance, the transactions on Bitcoin are processed via SHA-256, a cryptographic algorithm that generates a unique 256-bit or 32-byte value from the original data regardless of its size. Each block in Bitcoin contains a unique hash value that represents the transactions in that block and the preceding one. 

Through a proof-of-work consensus mechanism, miners engage in a computationally intensive task that involves solving a complex mathematical puzzle to find a value that produces the next block. These functions in Bitcoin allow it to record transactions at a higher rate and ensure it is secure against malicious actors.

Hash Rate

A hash rate is a measure of the computational and processing power of a cryptocurrency network.

What is Hash Rate?

Think of a block in a blockchain as a folder that contains files. The files have the most recent transaction information on a network. It takes a certain amount of computational power to confirm the validity and integrity of these files before they are added to the folder. This required computational power is the “hash rate”.

Hash rate is a measure of the combined computational power a blockchain network uses to process transactions. Hash rates also measure mining difficulty, which indicates how time-consuming it is to successfully add a block to a blockchain. They can indicate a network’s strength, including its security and health, based on the number of miners verifying the transactions. In other words, a hash rate determines the efficiency and performance of a crypto network.

How Do Hash Rates Work?

A blockchain network typically uses a special mathematical function known as the hash algorithm to randomly produce a hash value. Miners on the network compete to generate the correct hash. The winning miner is then allowed to validate transactions and is rewarded for solving the mathematical puzzle. 

However, generating a valid hash can take millions of guesses. The number of guesses made per second is computed as the hash rate. High hash rates mean that the network has many competing miners, which generally indicates that a network is secure and efficient. 

How to Measure Hash Rates

Hash rates measure the number of computations a network can perform per second. A blockchain network’s combined hash rate is estimated as the sum of the total hash rates of all the mining hardware in the network.

Hash rates are calculated in terms of hashes (guesses) per second (h/s). They can be represented in notations such as kilo (KH/s), mega (MH/s), giga (GH/s), tera (TH/s), peta (PH/s), and exa (EH/s).

Hashed TimeLock Contract (HTLC)

A Hashed TimeLock Contract (HTLC) is a smart contract that facilitates secure, time-bound asset transfers between two parties, ensuring the exchange only happens when specific conditions are met.

What is a Hashed TimeLock Contract (HTLC)?

A Hashed TimeLock Contract is essentially a type of smart contract that allows for secure, time-bound asset transfers between two parties on separate ledgers or blockchains. 

It ensures that assets are only exchanged once both parties fulfill the contract’s conditions, which mainly revolve around revealing a secret key. HTLC is important because it enables trustless, cross-chain exchanges without relying on intermediaries.

HTLC Lightning Network

In the context of the Lightning Network, HTLCs are critical for enabling fast, small-scale Bitcoin transactions without needing the main blockchain. They allow users to send and receive Bitcoin across interconnected channels securely, without relying on trust between participants.

For example, let’s say Alice wants to send Bitcoin to Carol but has no direct connection. Alice can route her payment through Bob using HTLC, ensuring that Bob can’t intercept the funds and all participants get paid only when the conditions are met.

By setting a time limit, the contract guarantees that if either party doesn’t act in time, the transaction is reversed, protecting everyone involved. 

This makes HTLC a cornerstone of scalable blockchain solutions like the Lightning Network, where fast, secure payments are essential.

Hedging

Hedging is a risk management strategy that involves simultaneous entering opposing positions in an asset to offset potential losses.

What Is Hedging?

In traditional financial markets, hedging is the practice of reducing one’s market risk exposure. It involves a trader or an institution opening a trading position in one market to offset potential losses in another market. This kind of investment is known as a “hedge.” 

In simpler terms, a trader takes a primary position in a specific asset and a counterposition in a related asset they anticipate to move in the opposite direction. The primary goal of doing this is to protect oneself from losses rather than make a profit. By taking opposing positions, the trader aims to offset the losses from the primary position using the profits from the counterposition.

A hedge in the cryptocurrency market is analogous to a hedge in traditional markets. It refers to the process of simultaneously taking opposing positions in a cryptocurrency market. Similar to traditional markets, it serves as insurance against investment losses should the asset’s price move in an unfavorable direction.

How Does Hedging Work in Crypto?

Besides insuring against losses, hedging helps balance unexpected cryptocurrency volatility by minimizing the downside risks of digital assets. The most common crypto hedging practices include crypto derivatives (options and futures contracts), contracts for difference (CFDs), short selling, and stablecoins.

• Futures contracts – Crypto futures obligate traders to buy or sell an underlying cryptocurrency asset at a predefined price at a specific date. It hedges against potential price movement. 
• Options contracts – Crypto options give traders the right, but not the obligation, to buy or sell an underlying asset at a preset price by a specific date. This means that they can choose to exercise or defer their right upon expiry.
• Contracts for difference (CFDs) – These are derivative products that enable traders to speculate on an underlying cryptocurrency’s price movement without directly owning the crypto asset.
• Short selling – Short selling refers to borrowing a cryptocurrency asset, selling it at the market price, and repurchasing it at a lower price to repay the loan.
• Stablecoins – A stablecoin is a type of cryptocurrency whose value is pegged or tied to another currency or asset, such as fiat money, precious metals, or another cryptocurrency.

While hedging crypto protects users against sudden market corrections, it is also prone to investment risks. For instance, it is susceptible to counterparty risks, where one party fails to honor its end of the deal, especially in over-the-counter trading.

Hierarchical Deterministic Wallet

A hierarchical deterministic wallet is a special kind of wallet that uses a random number to create virtually infinite cryptocurrency key pairs.

What is a Hierarchical Deterministic Wallet?

Public blockchains basically allow anyone to view all the transactions and balances you’ve made on the blockchain. A hierarchical deterministic (HD) wallet ensures that no one can know your exact balance by creating multiple addresses.

But before HD wallets, non-deterministic wallets ruled the cryptocurrency world. They used to produce unrelated key pairs for every crypto account. For instance, the public key and the private key were unrelated despite being for the same wallet or account. What’s worse, the derived key pairs can’t be retraced to an original random phrase. This forced users to back up every key pair separately. For one or two wallets, backing up four keys is reasonable (but not convenient), but imagine when you’re managing 100 accounts? That makes for 200 unrelated keys for you to track, which is quite impractical. A hierarchical deterministic wallet solves this challenge.

A hierarchical deterministic (HD) wallet describes a wallet that generates all its keys from a single recovery phrase in a tree-like pattern. This recovery phrase can be used to recreate the entire wallet, even if the wallet is lost or damaged. HD wallets have become popular for their convenience.

What are the HD Crypto Wallet Improvements?

Bitcoin Improvement Proposal 32 (BIP-32) introduced a hierarchical tree-like structure for crypto wallets while the BIP-39 standard provided the means to generate deterministic wallets. This enabled a random number – known as entropy – to derive virtually infinite key pairs. As a result, users can back up multiple accounts using a single secret code.

Technically, the entropy serves as the root of this tree-like structure. The entropy is translated to derive the secret recovery phrase, which then generates all the private keys and corresponding public addresses. The owner of the HD wallet can use the recovery phrase to recover their wallet if it is stolen, lost, or damaged. Hence, they are only required to back up this phrase as opposed to backing up individual key pairs. However, losing the secret recovery phrase means that the owner could lose access to their wallet and funds forever.

HD wallets use the entropy to generate the Extended Key Pair, a single key pair that governs all the addresses in the wallet. It consists of:

• Extended Private Key (xpriv): Generates all the private keys for corresponding addresses. Every time a new account is created, the xpriv produces a new private key. 
• Extended Public Key (xpub): Serves as a key for creating new public keys without involving the private keys, ensuring that the public address changes with every transaction. This improves users’ privacy and security.

To conceal your account balance from the public, both the xpub and xpriv should be stored in private.

High-Frequency Trading

High-frequency trading is a trading strategy that uses complex algorithms to execute a large number of trades in fractions of a second.

What Is High-Frequency Trading?

High-frequency trading (HFT) refers to a trading method that uses algorithms to analyze crypto market data and perform a large number of transactions within a short timeframe. Technically, it is a subset of algorithmic trading – a method of using advanced mathematical models to automatically place buy and sell orders in a crypto market.

HFT aims to capture small gains with each trade, which accumulate into significant gains over time. Since the decision-making of the orders to execute can occur within fractions of a second, automated bots or algorithms are used to enter and exit positions swiftly.

Given the complex algorithms used, HFT is often used by institutional investors. And while it allows market participants to leverage price fluctuations before they are reflected in the order book, it eliminates human decision-making and interaction. In addition, the fast transactions involved can potentially lead to major market moves.

How Does HFT Work?

HFT works on the principle of buying low and selling high. To achieve this, HFT algorithms analyze vast amounts of market data across multiple exchanges within milliseconds. These algorithms are designed to continuously identify patterns, trends, and the smallest price changes, among other subtle trading triggers.

The HFT system uses this analysis to automatically execute a large number of transactions in quick succession, typically capitalizing on the smallest price difference detected by the algorithm. That said, HFT systems use their ability to identify or predict shifts in trading volume and trajectory of institutional order flow to execute arbitrage, market making, and volume trading tactics.

For example, when a whale or large investor enters or exits a position on a certain crypto, the cryptocurrency’s value usually fluctuates. Specifically, the cryptocurrency’s price often drops when the whale sells their holdings. The HFT algorithm will quickly “buy the dip” and close the position once the cryptocurrency’s price recovers.

In short, HFT is the first in line to exploit any bid-ask spread immediately after the algorithm identifies an opportunity. This act typically removes high bid-ask spreads and offers a continuous flow of liquidity, thereby enhancing market conditions. Some exchanges even offer rebates and low fees for HFT providers to incentivize high-frequency trading.

HODL

“HODL” refers to the strategy of holding onto one’s digital assets with a long-term perspective despite market fluctuations.

HODL Meaning in Cryptocurrency?

HODL stands for “hold on for dear life”. It is a popular term used by crypto enthusiasts during periods of market volatility. The term originally came about as a misspelling of “HOLD” in a forum post. Now it is used to describe investors who choose to hold their digital assets for the long term, especially in bear markets. The term is also used to encourage investors not to sell in panic when there is a decline in the value of their portfolio. 

Origin of HODL 

“HODL” originated from a spelling mistake on the BitcoinTalk forum in 2013. A user, ‘GameKyuubi’ wrote a thread on the platform titled

“I AM HODLING” in which they expressed the intent to hold onto Bitcoins despite the market’s volatility. Since then, the word gained popularity within the cryptocurrency community as a playful and self-deprecating way to describe holding onto one’s cryptocurrency assets, regardless of market fluctuations.

The term has since grown to become one of the most popular slang in crypto circles. Two similar terms are “Diamond hands”, another slang term which describes users who hold tightly to their assets even in the face of significant market volatility or downturns.

Another popular slang term in the world of cryptocurrency that is similar to “HODL” is “BUIDL. In essence, “BUIDL” encourages individuals to be proactive in supporting the growth and adoption of cryptocurrencies and to participate in the technical and developmental aspects of the industry, rather than solely relying on buying and holding assets for speculative purposes.

 

Honeypot Crypto Scam

A honeypot crypto scam employs a malicious smart contract to entice unsuspecting victims with the prospect of substantial returns or rewards. The scheme’s ultimate intent is to swindle the victim’s funds.

What Is a Honeypot Crypto Scam?

In a honeypot crypto scam, an attacker uses a cryptocurrency wallet, token, or smart contract to bait unsuspecting users into investing, transferring, or trading crypto tokens. 

Honeypot scams often bait investors with a sumptuous “pot of cryptocurrency” or the promise of substantial returns. The scammers may pose as novice users seeking help or as honest businesses rewarding users. Individuals falling for such gimmicks make investments or transfer cryptocurrency to the scammer’s wallet. Only later do they realize that it was all a ruse and they’ve been defrauded.

 How Does It Work?

A honeypot scam happens in three steps. First, the bad actor deploys a smart contract that seems to have a design flaw that allows any user to extract the contract’s tokens. This is the “honeypot,” preying on users’ instinctual greed. What’s the catch? The user must first send a certain amount of cryptocurrency to the contract. 

Secondly, the unwitting users transfer the required cryptocurrency deposit and attempt to exploit the vulnerability to cash out. However, a second vulnerability prevents the victims from withdrawing their initial deposit and the contract’s stash. And finally, the attacker cashes out all the funds from the contract, including the victims’ deposit.

For example, Dechat mistakenly posted a honeypot smart contract link on Feb 26, 2024, on their social media platforms, which exposed users to financial loss. The protocol, however, immediately rectified the error.

Alternatively, the attacker first contacts other crypto users via social media platforms. They pose as novice users with substantial crypto funds requiring help cashing out or transferring. The bad actor promises the victim a portion of the said tokens and even provides their private keys to earn the victim’s trust and appear naive. 

While the victim finds a substantial amount of tokens that have significant value, they cannot be utilized to cover transaction costs. Hence, the victim is compelled to deposit the native token of the blockchain the wallet operates on to withdraw the tokens. Unfortunately, the funds are instantly redirected to another wallet using automated scripts once they reach the wallet.

 

Hot Storage

Hot storage, also known as a “hot wallet” is a crypto wallet that is connected to the internet, allowing users to manage their crypto assets online.

What is Hot Storage in Crypto 

Hot storage refers to any crypto wallet that secures the private keys for your blockchain assets within a software that is connected to the internet.

A hot wallet can be an application or web/cloud-based platform that can be accessed from a computer, mobile device, or the cloud. 

How Do Hot Wallets Work? 

Crypto wallets have two types of keys that act as a form of identification, allowing you to send and receive assets from your wallet: public and private keys. The purpose of a crypto wallet is to protect your private keys.

Private keys give you control over your crypto assets. This essential piece of data gives you agency over your blockchain address, and allows you to control whatever crypto assets are there. Hot wallets protect your private keys by securing them within a software interface. This interface is always connected to the internet, in other words, it’s “hot”. By contrast, cold wallets secure your private keys in a device that is isolated from internet connection.

So hot wallets secure private keys, and they do so in an online interface, as opposed to an isolated device.

Are Hot Wallets Safe? 

Hot wallets offer a convenient way to store your crypto private keys, because you can access them from any connected device. They are also designed to work with smart contracts, which makes them a valuable tool for exploring Web3. That said, hot wallets are also vulnerable to hacks, precisely because they are connected to the internet.

For example, a skilled hacker can deploy malware via your internet connection that manipulates your hot wallet. This can enable them to tamper with the interface as you send transactions, or even extract your private keys. In both cases, the crypto secured by those private keys would be vulnerable. 

Hacks will always be a possibility as long as you’re managing your private keys via hot storage, because the attack vector is your internet connection.

The only truly safe way to manage your private keys is to secure them in a cold wallet, which keeps them completely isolated from your internet connection. 

Crypto Hot Wallet Examples

There are hundreds of different hot storage options for your crypto private keys, but here are a few of the most commonly used options in the space.

• Metamask
• Phantom
• Temple
• Exodus

Note: Before using a digital wallet, check out the security and privacy policies, and be sure you’re comfortable with them. Some crypto exchanges require you to complete an identity verification step before using their hot wallet, while some are fully anonymous.  

Hot Wallet

A hot wallet is a crypto wallet that secures crypto private keys within an interface that is connected to the internet.

What is a Hot Wallet? 

A hot wallet is a type of crypto wallet that is connected to the internet at all times. It can be web-based, or a mobile or desktop app. These wallets store the private keys that provide access to your blockchain address and the digital assets stored on it. Users  authorize and execute transactions via the wallet interface. 

Hot wallets are best known for their convenience; they allow users to access their digital assets quickly and easily. However, they are also more vulnerable to cyber-attacks and hacks compared to offline wallets. 

How Does a Hot Wallet Work? 

A hot wallet is an online interface that stores the public and private keys for a blockchain address. It allows users to access their crypto holdings from any connected  device. 

Public and private keys are critical to your assets’ security. Functionally, public keys allow users to receive assets (like sending something to an email address), and private keys authorize direct access to assets within a blockchain address(like an email password). There are two broad categories of hot wallets, based on how users can access their account’s private keys. 

Custodial wallets: Custodial wallets are usually crypto exchange wallets like Binance and Coinbase. They allow users to view their public keys, but the custodian or wallet provider (the exchange) controls the private keys. The user accesses their wallet via login credentials – but has no direct link to the adress on the blockchain where the funds are stored. They rely on the custodian to facilitate their access.

Non-custodial wallets:Give users absolute control of their assets by leaving the user in charge of the private key for this blockcain address. This means users have direct access to their blockchain address, independently of the wallet. 

Users get a seed phrase (12-word recovery phrase) when they set up their wallet. This seed phrase encodes their private keys and helps a user regain access to the wallet if they lose their device. An example of a non-custodial hot wallet is Metamask. 

How Do I Keep a Hot Wallet Secure? 

Here are some tips to help keep a hot wallet secure: 

• Don’t store large crypto holdings in your hot wallet. Instead, move most of the assets to a cold wallet, and only use a hot wallet for trading purposes. 
• Try to distribute your crypto holdings across several wallets in case one system is compromised.
• Always download your mobile apps and software updates from the official website.
• For non-custodial wallets, keep your recovery phrase secure, preferably offline.
• Don’t share your private keys with anyone.
• Activate 2FA on your wallet if available.
• Don’t follow suspicious links or connect your wallet to any website to avoid phishing or attacks.
• Learn to understand smart contract functions, so you always know what you’re approving.

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将来、お金持ちになるには0.01BTC保有すればいいだけです。

現在10万ドル以上の資産を持つ残りの5億9000万人は、結果として大人1人あたり0.01BTCしか購入することができない。

将来はこの0.01BTCが持てるかどうかが富裕層の分かれ目となる。

0.01BTCを保有すれば、世界において13％の上位保有者に入る。法定通貨とビットコイン市場の相対的な富の集中度を比較すると、ビットコインのトップ13%の中にいることは、法定通貨での資産トップでいることと同じ価値を持つ。

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