Wallet
Crypto wallet: A crypto wallet is an app or device that stores the private keys that control your crypto. The coins themselves stay on the blockchain; the wallet holds the keys that prove ownership and sign transactions, and shows the address you share to receive funds.
How a crypto wallet works
When you create a wallet it generates a private key, and from that a public key and an address. To send crypto, the wallet signs the transaction with your private key and broadcasts it to the network. Most wallets back up every key with a 12 or 24 word seed phrase, which can restore the wallet on another device.
Hot wallets vs cold wallets
A hot wallet is connected to the internet, such as a mobile or browser wallet. It is convenient for regular use but more exposed to hacks and phishing. A cold wallet, usually a hardware device, keeps keys offline and signs transactions on the device itself, which suits larger long-term holdings.
Custodial vs self-custody wallets
With a custodial wallet, such as an exchange account, the provider holds the keys for you. With a self-custody wallet you hold the keys and the seed phrase yourself, so nobody can freeze your funds, but nobody can recover them for you either.
Frequently asked questions
Does a crypto wallet hold my coins?
No. Your coins are recorded on the blockchain. The wallet holds the keys that let you move them.
What happens if I lose my wallet device?
You can restore a self-custody wallet on a new device with your seed phrase. Without the seed phrase the funds cannot be recovered.