Yes, a hot wallet can be self-custodial.
- Hot wallets are cryptocurrency wallets that are connected to the internet. They can be software wallets (like mobile apps or desktop apps) that allow you to store and manage your cryptocurrency.
- Self-custodial means that you control the private keys to your cryptocurrency. No third party, like an exchange or service, holds your private keys for you.
Relationship Between Hot Wallets and Self-Custody:
- A hot wallet can be self-custodial if you are the one managing the private keys. For example, wallets like MetaMask, Exodus, or Trust Wallet are hot wallets that are also self-custodial. You hold the private keys, which means only you can access or control the funds.
- On the other hand, if you're using a hot wallet provided by an exchange (like Binance or Coinbase), where the exchange holds your private keys, this is not self-custody. In this case, you're relying on a third party to secure your assets.
Important Note:
While hot wallets can be self-custodial, they have the disadvantage that the private key is exposed to the internet, making them more vulnerable to hacking or theft. Therefore, if you're storing a significant amount of cryptocurrency, it's highly recommended to use a hardware wallet for better security.
