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Crypto Wallets Explained

Crypto Wallets Explained

Everyone’s doing Crypto these days, so it pays to know how to protect your hard-earned resources from CryptoBurglars. Should you be your own bank? Can you trust your local exchange? Is there another option to prevent your bitcoin sailing into the sunset? Sit back, grab a cup of NF-Tea, and we shall explain all about Crypto wallets.

Bitcoin – 100% electronic

Don’t expect to be sauntering down to the pub with a bitcoin in your pocket any time soon.

Crypto “tokens” aren’t a physical thing: like most money these days, they exist as data. But the data isn’t on bank computers, it’s stored in a “blockchain”. This is a fancy way of saying “big shared database stored on many computers that you only add to, not edit.”.

If you pay someone for something using Crypto tokens, the blockchain records what you did, and that record stays permanently.

Did you know? Bitcoin’s blockchain contains transactions dating back to 2008, and even contains a newspaper headline about the financial crisis that birthed Crypto.

So, if you can’t have Crypto in your pocket, how can you even own it? How can you prove it’s yours? And how can you use it?

Let’s imagine for a minute that the land registry didn’t exist. How would you prove you owned your house? Well, if you were the only one with the key, and your stuff was there, that would probably be enough proof for the world. Of course, people would know your street address – your public address – and would send stuff to you, and that’s how you’re known to the world.

Banking on you

Consider regular bank accounts. People and companies need to know your account details for sending money and even taking money. But they can’t access your account themselves.

This is because the bank needs private information from you before they allow access. It used to be security questions, but now it’s more SMS and even authenticator apps.

Why is a mobile phone important? Because there’s only one of it, and if you have it in your possession, it means you’re you. Say, you are you, aren’t you?!

Where’s Wallet?

In Crypto-land, it’s the same principle. Each blockchain has lots of “addresses”, and each address is a container that can hold Crypto. Each address is like a bank account, but a lot more powerful (and you can have loads of them yourself).

It’s perfectly OK for one of these addresses to be public. Knowing the address is not enough for someone else to rob you. Each address also has a hidden private key. The private keys are generated so that they’re impossible to realistically guess, even with the most powerful computers so far.

So, the main job of a Crypto wallet is to generate addresses for you and store the private keys securely.

Secondary jobs include management of the addresses, allowing trading and monitoring of prices.

Making addresses friendly

A secondary job of a wallet is to help you manage addresses by giving them friendly names: the public addresses tend to be collections of numbers and letters because the system was designed by techies. It’s a lot less easy to accidentally send Crypto to a Mr D. Racula if addresses are clearly labelled as “Auntie Ruth” or “Mr E. Musk”.

Tokens as far as the eye can see

A Crypto wallet also exists to allow you to hold and manage multiple Crypto tokens.

In the Crypto ecosystem, there’s not just Bitcoin (the king of Crypto). There’s Ethereum (Bitcoin’s nerdy brother), Bitcoin Cash (the spin-off series), Polkadot (pretender to the crown), and thousands of other options depending on how risky you’re feeling or whether you want to “collect ‘em all”.

Sometimes tokens live on other blockchains. A ton of them live on the Ethereum one for example.

The job of a good wallet is that you don’t have to worry about blockchains!

Exchange your exchange?

“But I bought some bitcoin from an exchange: isn’t that in a wallet?”

If your coins are at an exchange such as Binance or Coinbase then no: your actual bitcoin is in an exchange wallet which they own. In general, it’s fine to let your Crypto out to play with reputable companies for trading or earning.

“Do I even need an exchange?”

Maybe not. Some Crypto wallets allow you to buy and sell tokens, but keep your keys on the phone itself, or in your browser.

Sounds risky? Worried about computer and phone crashes? Understandable!

However, don’t worry. All reputable wallets use what’s called a “recovery phrase”. That’s a collection of words that looks like this:

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It’s very important that when a wallet gives you one of those phrases, you write it down, and keep it secret! The recovery phrase is specific to the wallet you’re using so make sure you note that information too. It allows you to recover your private keys and access to your stash.

You may never need it, but by golly it’s good to know you’re covered.

Hot or Cold Wallets: you choose!

Who has custody of your Crypto and whether the private keys are online are the two biggest factors in choosing what wallet (or type of wallet) to use. Remember, your Crypto is always online, but the keys to access it can be offline (“Cold”) or online (“Hot”).

Hot wallets can be non-custodial (you have your keys) or custodial (if someone else does). Most people use hot wallets (because it’s convenient) that are also non-custodial (so you own and administer the Crypto). However, some financial activities (such as interest earning, with companies such as AQRU) don’t necessarily require you to “stake” your coins (another word for “depositing” them).

Cold Wallets

Your Crypto stash boils down to essentially a list of private keys, one for each address. If you have those, you can access your funds from any wallet. So, is a piece of paper with these keys written on it a wallet? Well, yes it is. It’s a cold wallet. Just keep it safe!

Perhaps you’d rather not trust your keys to something the dog might eat (once it’s finished on the kids’ homework). For instance, there are also USB-based hardware wallets from companies such as Trezor or Ledger. At heart, these are an electronic way of keeping your keys safe. Unlike paper, these wallets also come with a recovery phrase (if you lose the USB), and other security such as a PIN (to keep the kids out of your retirement fund if they find it lying around).

Some browser-based wallet apps such as Metamask allow you to connect a hardware wallet instead of creating its own soft addresses on your hard disk.


There’s nothing to stop you having multiple wallets accessing the same addresses or getting your private key list from the wallet and writing it down. The only limit is your imagination!

Everyone’s a Wallet

So, to recap: Crypto wallets create and manage addresses on a blockchain to allow you to send and receive funds, and sometimes allow you to trade and swap tokens. We bet you never thought you’d understand that sentence when you started reading!

You’re excited to get started. We can tell. But is there anything else you should know?


Surprisingly, it’s a lot easier to trace criminal activity in a blockchain than in the regular financial system, with its portable bits of untraceable paper and offshore funds.

On most blockchains, transactions can be traced from the outside. This isn’t true for the global financial system, which is full of nooks and crannies for people to hide cash. So don’t worry about that.

Safety in Numbers

In the Crypto world, big numbers of users is a good thing. A large user-base means support, and there’s also likely to be more concern about keeping to the regulations because they have more to lose. Stick with the big Cryptos, the leading wallets and the leading exchanges and you’ll be fine.

Support levels can vary greatly from company to company, so always take public complaints about slow service seriously.

Recommendations – getting started with Crypto wallets

Here at AQRU, we use leading wallet infrastructure provider Fireblocks to ensure the security of assets that are invested with us to earn interest. Used by over 800 institutions globally, Fireblocks has secured the transfer of over $2 trillion worth of digital assets to date. The wallet utilises Multi-Sig technology and next-gen protocols to provide bank-level security, so our customers can rest assured that their funds are protected.

Other leaders in mobile wallets are (“ DeFi Wallet”), Coinbase and Trust Wallet. and Coinbase offer easy access to their exchanges within the app (Coinbase is more expensive than, and offers debit cards along with other features.

All three can be downloaded from app stores everywhere, though regulation varies wildly between countries, so they may not be available in your area.

One other leader for browser-based wallets (which also has a mobile app) is Metamask, a browser add-in for Chrome, Firefox and more. It creates addresses for you if you want it to, can interface with hardware wallets, and some websites can connect directly to it (with your permission).

NFT site and new Digital Securities exchange INX Securities both spring to mind here.

In the field of hardware wallets, Ledger and Trezor are the big names, and you can’t really go wrong with devices from either, but it might be overkill for most.

Paper wallets: We recommend A4, cream, with a nice texture.

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