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)

Some wallets are better than others — and there are many different options available.

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🧠 Common Misconceptions

There are many misconceptions and lack of understanding in how crypto wallets work. Technically, wallets don’t ‘hold’ cryptocurrencies.

In a nutshell

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.

Think of a blockchain as an accounting system, where only balance changes are recorded.

Extensive

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.

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🔐 What Do You Actually Own?

In a nutshell

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

Extensive

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.

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🗝️ 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.

Key Type	What It Does	Shareable?
Public Key	Your receiving address	✅ Yes
Private Key	Your access password to the wallet	❌ No

In a nutshell

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

Extensive

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.

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🤝 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

Self-custody is one of the defining features of decentralized finance and crypto. You are in charge - and responsible - for your own digital wealth.