What is a crypto wallet?
Here’s a guide to crypto wallets - what they are, the different kinds you can install, and more. If you’re stuck on any terms in this section, head over to our helpful glossary of NFT and Web3 terms here.
Unlike a real-world wallet, where your cash is stored directly inside, a crypto wallet allows you to access your digital assets and crypto stored on the blockchain. It is a key to their location - like a private treasure map.
Control and access over these assets are managed by a crypto wallet owner’s private key - a string of random letters and numbers that you produce whenever you ‘sign’ for a transaction in your crypto wallet window, for example. You should never need to access this directly - it’s stored within your wallet application. What you will have access to, however, is your seed phrase which is given to you when you set up a wallet and should never be shared with anyone. A seed phrase is an easy way to restore and retrieve your private key. Whoever controls your seed phrase controls your private key, wallet, and funds.
There are also public keys associated with crypto wallets - your wallet address is the public key that anyone can view and access. It grants no control over your wallet but allows for transactions to occur - the same way that someone can transfer money to your bank account, knowing your account number but not having the password to access your funds.
The two types of wallets:
Managed by a third party.
Managed directly by you.
Usually don’t support NFTs.
Can be hardware or software wallets.
If you have a custodial wallet, a third party secures your private key. If you’re trading NFTs, you’re most likely using a non-custodial wallet and securing that wallet yourself. Here are a few security tips:
Your seed phrase is a unique 12-word phrase that is a password to your wallet and all your assets. It is unsafe to store this digitally as a picture, text, or otherwise on a mobile device or laptop. We recommend writing it down and storing it in the real world.
The private key stored in your wallet application is not something you should ever need to access directly. We do, however, recommend using a well-known and recommended wallet application.
Wallets can be Hot or Cold. We’ll give you some time to get that Katy Perry song out of your head before explaining the difference between these two:
A hot wallet is always connected to the internet. While easily accessible and convenient, it is also more open to hacking and phishing attacks.
A cold wallet is not connected to the internet. This makes it less accessible but also highly secure. A cold wallet is often a hardware wallet, but you can use a laptop only when you need to access your wallet or a software paper wallet stored in a safety deposit box, for instance.
Recommended advice in the crypto space for securing your wallet is to have two - one hot for everyday transactions and a cold wallet to store your crypto long-term. Don’t keep anything you can’t afford to lose in your hot wallet.
Staying safe with your wallet
For more details on user safety and security, check out our User Safety section for tips on keeping your NFTs secure.