What is a crypto wallet?
A crypto wallet is like your bank account, but without the bank. You are the bank — you control everything in your account.
A wallet is simply a piece of software that allows you to:
Store cryptocurrency
Send and receive crypto
View transaction history
See account balances
Interact with dApps (decentralized applications)
🧠 Common Misconceptions
There are many misconceptions and lack of understanding in how crypto wallets work. Technically, wallets don’t ‘hold’ cryptocurrencies.
Let’s clarify:
Wallets don’t technically “hold” your cryptocurrency
Your coins do not exist physically and are not stored on your device
They only ever exist on their respective blockchain
When you “send” crypto, it doesn't physically move — balances on the blockchain are updated instead.
Your coins do not physically exist and are not stored on any device, they only ever exist on their blockchain. The assets can move from one address to another or, more properly, the balance of the addresses can change, but it doesn’t actually go anywhere. Don’t forget that a blockchain, in simple terms, is an accounting system where balances are updated.
🔐 What Do You Actually Own?
When you “own” cryptocurrency, what you actually own is:
✅ A private key
A wallet safeguards this private key, which represents:
Your account credentials (also called seed, secret, passphrase)
The ability to sign transactions
The power to control your assets
When you create a new wallet, it generates:
A private key
A public key
Your coins do not physically exist and are not stored on any device, they only ever exist on their blockchain. The assets can move from one address to another or, more properly, the balance of the addresses can change, but it doesn’t actually go anywhere. Don’t forget that a blockchain, in simple terms, is an accounting system where balances are updated.
When you own cryptocurrencies, what you actually own is a private key. Wallets safeguard this private key, which are your account credentials (seed, secret, passphrase) and use those credentials to sign/do transactions. When you create a new account on a crypto wallet, you get a private key and a public key.
🗝️ Public vs Private Keys
The “private key” is usually random words or numbers that you must protect by all costs and not reveal to anyone.
Public Key
Your receiving address
✅ Yes
Private Key
Your access password to the wallet
❌ No
Public and private keys are a fundamental part of blockchain tech.
📨 Your public key is like your email address — you can safely share it. 🔐 Your private key is like your password — never share it with anyone.
📌 Private Key = Seed Phrase = Recovery Phrase
Usually 12 or 24 random words
Sometimes called mnemonic phrase
Grants full access to your account and funds
If someone gains access to your private key, they can steal your assets. If you lose your private key, you cannot recover your funds.
🧬 Cryptographic Link
There is a mathematical relationship between your private key and public key:
If you have the private key, you can recover the public key and wallet
If you only have the public key, you cannot derive or recover the private key
Public and private keys are an integral component of cryptocurrencies and blockchain technology. Public and private keys are subsequently analogous to an email address and password, respectively. Your public key is your receiving address, which you can share with anyone to send you cryptocurrencies. Your private key (also called seed phrase, passphrase, recovery phrase or mnemonic) is your password, usually 12 or 24 random words, which unlocks the right to access your account and spend the associated cryptocurrencies. As it provides access to your cryptocurrencies, it should – as the name suggests – remain private and never shared with anyone. There is a cryptographic link between the public key and the private key and you can recover the public key and your account if you own the private key. However, it’s impossible to find or recover the private key using only the public key.
🤝 Self-Custody: You Are the Bank
Owning and controlling your private keys means you have full control over your crypto.
This is called self-custody, and it’s a core benefit of blockchain technology.
💡 Why Self-Custody Matters
No third party needed to approve transactions
You hold your funds even if exchanges or apps shut down
You can access your wallet anywhere with your private key
You are responsible for your own security
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