Wallet

Despite the name, crypto wallets don’t actually store any cryptocurrency. Instead, they store the cryptographic keys to allow users to interact with their digital assets, which are recorded on the blockchain’s public ledger. Wallets hold both public addresses and private keys. Public addresses can be given out to receive funds, whereas private keys are used for approving transactions.

When sending funds or interacting with blockchain DApps, the wallet’s digital signature is checked by the blockchain network to verify that the transaction is valid. This also means that anyone who obtains a user's private keys (or the secret recovery phrase used to retrieve them) can potentially steal their assets. Losing this information can also result in permanent loss of access to funds stored in the wallet.

Choosing a wallet therefore involves balancing convenience, security and functionality.

There are generally two types of crypto wallet: software wallets and hardware wallets. Software wallets such as MetaMask and Phantom are applications that can be downloaded onto your smartphone, computer or web browser. These are usually referred to as hot wallets as they are connected to the internet. Hardware wallets such as Ledger and Trezor, on the other hand, store private keys offline.

While hardware wallets are generally considered safer, since the private keys are never exposed to the internet, they can come with their own risks. Tampered devices can be used to steal user funds, as happened in the October 2026 Ledger supply chain exploit.