A cryptocurrency wallet is a device, platform or service that lets you access and interface with their private keys and store and control their cryptocurrency. Cryptocurrency wallets can be run on browsers, desktop and smartphone apps and physical hardware devices.
Wallets have the very important job of securing your private keys, and different types of wallets provide you with various levels of convenience and security.
A common misconception is that wallets store your cryptocurrency. This is incorrect. But this is actually not the case. Your cryptocurrency is stored on its native blockchain and can be accessed with the use of your private key. Wallets let you interface with your private keys to access and control the storage, sending and receiving of your cryptocurrency.
For example, your BTC is stored in an address on the Bitcoin blockchain. When you use your private key in conjunction with a wallet, you can access and control your BTC.
One of the most important distinctions to make between wallets is understanding the simple difference between hot and cold wallets.
Hot wallets are not physical. They exist online or on a device that is connected to the internet, enabling higher levels of convenience, but lower levels of security.
Examples of hot wallets are web wallets, desktop wallets and mobile wallets.
Cold wallets are typically physical and are not connected to the internet, enabling higher levels of security but lower levels of convenience.
Some cold wallets will have an associated online client or can be paired with third-party online clients, letting you manage your cryptocurrency more easily.
Examples of cold wallets are paper wallets, hardware wallets and CryptoSteel.