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Hot Storage Meaning

A storage method for digital assets where the data or private keys are kept on a device that is connected to the internet. This allows for near-instant access, which is essential for active trading, automated withdrawals, and facilitating liquidity on exchanges.

While highly convenient, hot storage represents a higher security risk compared to cold storage because it is susceptible to remote hacking, malware, and phishing attacks. To mitigate this, most professional entities only keep a small percentage of their total assets in hot storage, treating it as a "working capital" fund.

In cloud infrastructure, "hot" tiers refer to high-speed data retrieval systems where information is stored on high-performance drives like SSDs.

This ensures that the latency between a user request and data delivery is kept to an absolute minimum, though at a higher operational cost.

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