CRYPTO WALLETS & SECURITY
Plain English
A crypto wallet doesn't actually store coins — it stores your private key, which is your password to access funds on the blockchain. Lose your private key and your crypto is gone forever. Keep it on exchanges and you're trusting them not to get hacked.
Going deeper
Crypto wallets manage cryptographic key pairs: a public key (your address, like an email) and a private key (your password, never share this). 'Hot wallets' are connected to the internet (exchange accounts, mobile apps like MetaMask) — convenient but vulnerable to hacks. 'Cold wallets' (hardware wallets like Ledger, Trezor) store private keys offline — more secure but less convenient. A 'seed phrase' (12-24 words) can recover your wallet if the device is lost. 'Not your keys, not your coins' is a core crypto principle — if your crypto is on an exchange (custodial), they control it. Self-custody means you hold your own keys.
Examples
The FTX Collapse
In 2022, FTX — one of the world's largest exchanges — collapsed overnight. Users who held crypto ON the exchange lost access to billions. Users who had withdrawn to self-custody hardware wallets were unaffected.
Seed Phrase Safety
Your seed phrase is '12 random words.' Write it on paper. Store it in a fireproof safe. NEVER type it into a website or email it. Anyone who has these 12 words has full access to your crypto — forever.