What is a crypto wallet?

If your crypto isn’t inside your wallet, where is it? Transactions and balances are recorded on the blockchain. A wallet is the tool that lets you interact with that network, not a digital pouch full of coins.

Think of it like a key ring: it doesn’t contain the house, but the keys that open its door. Likewise, a self-custody wallet manages the private keys you use to approve transactions. The wallet address is what you give someone so they can send you crypto, not your private key.

When you send cryptocurrency, you enter the recipient’s address and the amount. The wallet creates the transaction, signs it digitally with the appropriate key and broadcasts it to the network. There’s usually a network fee, which you need to check before you confirm.

Why it matters

The key question for us is: who controls the keys? With self-custody, you control them. With a custodial service, as is usually the case with your account on a centralized exchange, the provider manages them. You see a balance on the screen, but you depend on the provider to process a withdrawal.

There are wallets on mobile, desktop or as a browser extension, as well as dedicated devices, known as hardware wallets. Hot wallets keep the keys in an environment connected to the internet, while cold wallets keep them offline. Convenience and security involve different trade-offs in each case.

What to watch out for

Many self-custody wallets give you a seed phrase (recovery phrase). Anyone who gets hold of it can usually restore the wallet and control its funds. Don’t share it with “support” or enter it on unknown websites. If it’s lost along with access to the keys, there may be no way to recover your funds.

Also check that the wallet supports the specific coin and network. Addresses that look the same don’t always mean the same network. And before you sign, read what you’re approving: a malicious app may be asking for permission to transfer tokens, not just to connect.