A crypto wallet doesn't actually store your cryptocurrency — your coins live on the blockchain. What a wallet stores is your private key: the cryptographic proof that you own those coins and can spend them. Think of it less like a physical wallet and more like a keychain for your digital assets.
How Wallets Actually Work
Every crypto wallet generates a pair of keys:
- Public key → wallet address — derived from your public key, this is what you share with others so they can send you crypto. It looks like
0x71C7...3a9F. Sharing this is safe — it's like giving out your email address. - Private key — a long random number that proves you own the address. Never share this. Anyone who has it can take everything in the wallet. (See our seed phrase deep dive for more.)
When you send crypto, your wallet uses the private key to sign the transaction — proving to the network that you authorized it. The private key never leaves your device during this process.
Types of Wallets
Wallets come in two broad categories:
- Hot wallets — connected to the internet. Browser extensions (MetaMask), mobile apps (Trust Wallet, Rainbow), desktop apps. Convenient for daily use, but more exposed to hackers and malware.
- Cold wallets — offline devices. Hardware wallets (Ledger, Trezor) store your keys on a physical device that never connects directly to the internet. Best for long-term storage.
We have a full comparison in our hot wallet vs cold wallet guide. The short version: use a hot wallet for everyday transactions (like receiving RentAHuman payments) and a cold wallet for savings you don't need to access frequently.
Custodial vs Non-Custodial
This is a crucial distinction:
- Custodial wallet — a third party (usually an exchange like Coinbase) holds your private key for you. Convenient, but you're trusting them not to lose it, get hacked, or freeze your account.
- Non-custodial wallet — you hold your own private key. MetaMask, Ledger, and most standalone wallets are non-custodial. Full control means full responsibility.
"Not your keys, not your coins." When FTX collapsed in 2022, users with custodial wallets on the exchange lost billions. Users who had already withdrawn to their own wallets were unaffected. Custody matters.
What Can You Do With a Wallet?
- Receive payments — share your address to get paid for tasks, bounties, or any other transaction.
- Send crypto — transfer to another wallet, pay for services, or send to an exchange to cash out.
- Interact with dApps — connect to DeFi protocols, NFT marketplaces, or platforms like RentAHuman.
- View your balances and history — everything is on the public blockchain, but your wallet provides a friendly interface.
Common Mistakes to Avoid
- Sending to the wrong address — crypto transactions are irreversible. Always double-check the first and last few characters of an address before sending.
- Wrong network — sending ETH on the wrong network (e.g., Arbitrum instead of Ethereum mainnet) can result in lost funds if the recipient doesn't support that network. See our network guide.
- Not backing up your seed phrase — if your phone breaks or you uninstall MetaMask, your only way back is the seed phrase. Write it down and store it securely. Learn how.
- Approving malicious contracts — always read what you're signing. If a site asks you to "approve unlimited spending" of a token, be very cautious.
Next up: learn the difference between hot and cold wallets, or set up your first wallet with our MetaMask tutorial.