Learn / Keep it safe · 1 of 4
Wallets 101
A bitcoin wallet holds the keys that let you spend your coins, not the coins themselves.
- Lose the keys and every backup, and the coins are gone. Share them and someone can take the coins.
- An address is like an account number you share to get paid. A private key is the secret that lets you spend. Never share it.
- Custodial means a company holds the keys for you. Self-custody means you hold them.
Hot or cold
A hot wallet is an app on your phone or computer. It is handy for spending money, but it is always online. A cold wallet, usually a small hardware device, keeps your keys offline and is the safer home for savings.
Custodial or not
On an exchange, and in some simple apps, the company holds the keys. That is easy, but you are trusting it to stay honest, able to pay and open. With a self-custody wallet, only you can move the coins, and only you can lose them.
Most self-custody wallets give you a recovery phrase that can rebuild the wallet on any device. Ready to set one up? Read Self-custody in 3 steps.
Want to go deeper?
Can I reuse the same address?
You can, but it is better not to. Most wallets show a fresh address each time you receive, which keeps your payment history more private. Old addresses still work.
What happens if an exchange goes bust?
Coins it held for customers can be frozen or lost, as happened with Mt. Gox in 2014 and FTX in 2022. Coins in your own wallet are not affected.
Is my phone wallet's balance stored on my phone?
No. The balance is recorded on the Bitcoin network. Your phone only stores the keys, which is why your recovery phrase can bring everything back on a new device.