A crypto wallet is a digital or software-based way to access your cryptocurrencies.
Unlike a regular wallet, a crypto wallet doesn’t actually hold your assets. Instead, it stores credentials called private keys that give you access to your assets on the blockchain.
Depending on the type of crypto wallet you have, you can:
- Send, receive, and pay with crypto
- Store crypto
- Create a digital “vault” online that’s only accessible to your loved ones
- Interact with web3 applications that let you lend and borrow against your crypto
- Buy, sell, and store NFTs
- Earn on your crypto in a crypto rewards account
To recap: crypto wallets store your public and private keys as well as a linked receiving address so you can send and receive crypto securely
Crypto wallets consist of three parts: a public key, a private key, and a public receiving address.
Whenever someone sends crypto from their wallet, they must use their private key to “sign,” or confirm, the transaction. This digital signature is like a fingerprint, unique to each individual and their private key, proving that the transaction is coming from the legitimate owner of the wallet and hasn’t been tampered with.
Crypto wallets all begin with a private key, a long, randomized string of letters and numbers. These private keys can also take the form of a QR code or mnemonic phrase.
This private key is used to generate a public key through an encryption process. While it’s easy to verify that a specific private and public…