A crypto wallet is a computer program that acts as an identifier, and is used for you to be able to access and manage your tokens and coins. Like a regular money wallet, a crypto wallet is yours and yours alone, unless someone manages to steal it from you.
In fact, a crypto wallet has more similarities to a bank account than a physical wallet. Think about it: you opened a bank account in a godforsaken tax haven under the name “Scroogeie Scrooge”, using a fake document. The bank clerk gave you a card with your account number and a separate document with your account password, and since your name is fake, if you lose the password you lose control over your wallet. This is basically how your crypto wallet works.
This also means that if someone steals or copies your document password, they will gain full access to your account, and you will not be able to do anything.
Your funds
Your money inside your crypto wallet is not stored inside the wallet, contrary to what it seems. In fact, these cryptos of yours are stored inside the blockchain, and the wallet basically allows you to change records related to your address in the wallet. This is one of the reasons why they say that if you don't have the keys, the coins aren't yours: if you don't own the public and private keys, you can't move the funds.
This is why your wallet on Binance or on another exchange is not really yours: in the event of a change in the law of your country or any tax investigation, your funds will be blocked and you will no longer be able to withdraw your tokens. Therefore it is always recommended that you withdraw your funds from time to time, unless you are a trader.
Hot Wallet and Cold Wallet
When you are choosing a wallet, you will come across two main categories to choose from: hot wallets and cold wallets.
A hot wallet, in short, is a wallet that is always connected to the internet, usually even being a browser extension or a mobile app. Some examples are the Phantom of the Solana network and the Metamask of the Ethereum network.
A cold wallet is a piece that looks like a USB drive or similar. It is not connected to the internet, and you have to plug it into your computer to use it. They are theoretically more secure than hot wallets, but using them requires a few extra steps, and using them requires a few extra steps.
There are still those who prefer to simply create their wallet, write down the public and private keys on paper and keep it in a safe place. Of course you could still lose your funds from this, but it probably won't be because someone hacked you.
And you, did you know all this? Do you have any complements, criticism, praise or opinion? Leave it in the comments, your opinion is very important to me 😄🥰
