What is a crypto wallet?
A crypto wallet does not store your coins. Your balance is recorded on the blockchain, a public ledger anyone can inspect. What the wallet actually holds are the keys that prove that balance is yours, which is why people say you are not really moving coins around, you are proving you have the right to spend them.
Two pieces do the work. Your address is public. Your private key is secret, it signs transactions and authorises anything leaving the wallet. Whoever holds the private key controls the funds. That single sentence explains most of what follows.
So the first real decision is not which app to install. It is who holds the key.
| What happens if… | Self-custody wallet | Custodial wallet |
|---|---|---|
| Who holds the keys | You, on your own device | A company, on your behalf |
| You forget your password | Restore from your own backup | Their support team can usually help |
| You lose your backup | No one can recover the funds | Not your problem — they hold the keys |
| The provider is hacked or fails | Your keys are yours, so your funds are unaffected | Your funds can be frozen or lost with them |
| You want to send a payment | You approve it yourself, any time | You request a withdrawal and wait |
The second distinction is how connected the wallet is. A hot wallet lives on an internet-connected device, a phone or a computer, which is what makes everyday sending and receiving practical. A cold wallet keeps keys off the internet entirely, which trades convenience for a smaller attack surface. It is not really either/or: a common setup is a mobile wallet for the money you actually spend, and something offline for the amount you would hate to lose.
Three things worth doing from day one:
- Complete your backup before you put meaningful money in, not after.
- Share your address freely; never share your recovery credentials with anyone, for any reason.
- Send a small test amount the first time you pay a new address.
For a closer look at who controls what, read custodial versus self-custodial wallets.