Level 1 — Understanding Crypto
What is a wallet?
4 minute read
The key, not a bag of coins
Illustrative example · not live data
Wallet holds keys
Keys authorise spending
Coins stay on blockchain
A crypto wallet stores the keys that prove you own your coins. The coins themselves always live on the blockchain — the wallet is what lets you access and spend them.
There are two main types. A 'hot wallet' is an app or website connected to the internet — convenient, but more exposed to hackers. A 'cold wallet' is a small physical device (like a USB stick) kept offline — the safest option for larger amounts.
Every wallet has a 'recovery phrase': a list of 12 or 24 words that can restore your wallet if you lose your phone or device. Whoever has those words controls your coins.
Golden rules: never share your recovery phrase with anyone, never type it into a website, and write it down on paper — not on your phone or computer. No legitimate company will ever ask for it.
Key points to remember
- A wallet holds the keys to your coins
- Hot wallets are online; cold wallets are offline and safer
- Your recovery phrase controls everything — guard it
- Never share the phrase or type it into a website