What is a crypto wallet? Hot vs cold wallets and seed phrases

A crypto wallet is software or a device that manages your private keys. The key lets you sign transactions and prove you own the coins recorded at your public address on the blockchain.

The wallet does not hold coins like a purse. It holds the keys, and anyone who gets your private key can move your funds.

A hot wallet, such as a phone or browser app, is connected to the internet. It is handy for frequent use but exposed to malware, phishing and device theft.

A cold wallet keeps keys offline, for example on a hardware device or on paper. It is much harder to attack remotely and is commonly used for savings, though it is less convenient for trading.

When you create a self-custody wallet, you receive a seed phrase of 12 or 24 words. It can rebuild all your keys on a new device. Write it down offline and never share it or type it into a website; no honest support team will ask for it.

If you keep coins on an exchange, the exchange holds the keys for you. That is custody risk: if the platform is hacked, fails or freezes withdrawals, you may be unable to reach your funds. Self-custody removes that risk but makes you fully responsible.

Lost seed phrases cannot be recovered, and transactions cannot be reversed. Sending to a wrong address or on the wrong network can lose funds permanently.

Common mistakes include storing the seed phrase in a photo or cloud note, using fake wallet apps and sending a large amount without a small test first. Check the current rules and use trusted software.