What Is a Cryptocurrency Wallet and What Does It Control?
A cryptocurrency wallet stores the keys that let you send, receive, and control crypto; the coins stay on the blockchain, not in the wallet.
Vahe HakobyanEditor-in-chief
Updated Oct 5, 20263 min readFact-checked
On this page
- Keys control access to coins that stay on the blockchain.
- Share a public address and check the network before sending.
- A recovery phrase restores access, so keep it offline and private.
People use a wallet to view balances, send funds, and sign in to apps. On the Ethereum blockchain, an account is a key pair that creates a shareable address.
What does a crypto wallet hold?
A wallet does not hold coins. The blockchain records which address controls which coins, and your keys unlock them.
How do you send and receive crypto?
To receive crypto, share your public address and confirm the network. To send crypto, enter the recipient's address, choose the network, and approve with your key.
Who controls your crypto?
A custodial wallet is run by an exchange or another company, which holds your keys. A self-custodial wallet puts the keys in your hands, so you control access and carry the risk.
Hot wallets vs cold wallets
Hot wallets stay online for convenience, but they face malware and phishing. Cold wallets keep keys offline, which is slower but safer against remote attacks. A cold wallet guide explains how offline keys work.
How do you protect your recovery phrase?
A recovery phrase is a list of words that restores wallet access. Write it offline, store it safely, and never share it.
Frequently asked questions
In a self-custodial wallet, you lose access unless you have another backup. A custodial service may help you recover your account.
No. Wallets support specific blockchains and tokens, so check before you receive. The wrong network can lose funds.
Usually not. Bank deposits may have federal insurance, but wallet holdings do not have the same protection.
No. An exchange account usually includes a custodial wallet. You can move crypto to a self-custodial wallet if you want.
