Hot chocolate is a warm beverage made with ground chocolate, heated milk or water, and sugar. Sometimes called hot cocoa, the terms hot chocolate and hot cocoa are often used interchangeably by Americans. Hot chocolate is made from ground chocolate that contains cocoa butter. Hot cocoa is made from the cocoa powder component from the cocoa beans after the cocoa butter has been extracted. Through the fermentation, drying, roasting and grinding process of cocoa beans a paste called chocolate liquor is produced. It is this cocoa powder that we use to make hot cocoa.