Glossary

Wallet

Plain-language definition Crypto glossary

Key takeaways

A crypto wallet is a tool that stores the private keys needed to access and move cryptocurrency, while the coins themselves never leave the blockchain.
Each wallet manages key pairs in which the public key produces an address for receiving funds and the secret private key authorises spending, with hot wallets kept online for convenience and cold wallets kept offline for security.
Controlling the keys means controlling the funds, captured by the phrase "not your keys, not your coins," so a custodial service reintroduces trust while self-custody puts you fully in charge.

Definition

A crypto wallet is a tool that stores the private keys needed to access and move cryptocurrency. The coins themselves never leave the blockchain; the wallet holds the keys that prove ownership and let you sign transactions.

How it works

Each wallet manages one or more key pairs. The public key produces an address you can share to receive funds; the private key authorises spending and must stay secret. Wallets fall into two camps: hot wallets are connected to the internet for convenience, while cold wallets stay offline for security. Most wallets let you restore access from a seed phrase if the device is lost.

Why it matters

In crypto, controlling the keys means controlling the funds — the phrase “not your keys, not your coins” captures this. A custodial service holds keys on your behalf, which is convenient but reintroduces trust; a self-custody wallet puts you fully in charge, along with full responsibility for backups.

Example

A hardware wallet keeps your private key on a dedicated offline device, signing transactions without ever exposing the key to an internet-connected computer.

FAQ

Frequently asked questions

If coins are on the blockchain, what does a wallet actually hold?

A wallet does not hold the coins themselves, which always remain on the blockchain. It holds the private keys that prove ownership and let you sign transactions to move those coins.

What is the difference between a hot wallet and a cold wallet?

A hot wallet stays connected to the internet for convenience, making it easy to transact but more exposed. A cold wallet stays offline for greater security, which suits longer-term holdings that do not need frequent access.

What does "not your keys, not your coins" mean?

It means that whoever controls the private keys effectively controls the funds. A custodial service holds keys on your behalf, which is convenient but reintroduces trust, while a self-custody wallet puts you fully in charge along with full responsibility for keeping the keys safe.