A crypto wallet doesn’t actually store your coins inside it — the coins’ ownership record lives permanently on the blockchain. What the wallet stores is your private key, a secret code that proves you control a given address and lets you authorize transactions from it. Wallets come in two broad flavors: “hot” wallets (connected to the internet, more convenient, e.g. a mobile app) and “cold” wallets (offline hardware devices, more secure for large holdings).

The most important distinction for beginners is custodial versus non-custodial. A custodial wallet — like the wallet inside most exchange apps — means the exchange holds the private keys on your behalf, similar to a bank holding your money. A non-custodial wallet means you alone hold the private key (usually backed up as a “seed phrase” of 12-24 words), and if you lose that phrase, there is no password reset and no customer support that can recover your funds — this is the origin of the crypto community’s phrase “not your keys, not your coins.”

🇵🇭 Philippine Example

Most Filipinos' first crypto wallet is custodial and built into a BSP-licensed platform — such as Coins.ph (operated by Betur Inc., BSP-licensed since 2017) or GCash's GCrypto feature, which is powered by PDAX (BSP-licensed since 2018). These custodial wallets trade some self-custody control for the convenience and consumer protections that come with using a regulated Virtual Asset Service Provider rather than a fully self-managed wallet.

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