Crypto Wallets Explained

A crypto wallet does not "hold" coins the way a physical wallet holds cash. Your coins live on the blockchain; the wallet stores the private keys that prove the coins are yours and let you spend them.

Wallets come in two broad types. A hot wallet is connected to the internet — a phone or browser app that's convenient for everyday use but more exposed to hacks. A cold wallet keeps keys offline, often on a dedicated hardware device, which is far safer for larger, long-term holdings.

Most wallets show you a recovery phrase (usually 12 or 24 words) when you set them up. Anyone with that phrase can take your funds, and no one can restore it if you lose it. Write it down, store it offline, and never type it into a website or share it — legitimate services will never ask for it.