A wallet is a key manager with an interface. The balance it shows is read from the network; what the wallet actually holds is the ability to sign, which is why losing a device is survivable with a backed-up seed phrase and losing the seed phrase is not.
Wallets fall into two broad groups. Self-custody wallets keep the keys with you. Custodial accounts — most exchanges — keep the keys with the business, which is why an exchange can freeze an account and a self-custody wallet cannot be frozen by anyone.
Related terms
Cold wallet
A wallet whose keys never touch an internet-connected device; signing happens on the device itself.
Hot wallet
A wallet running on an internet-connected device, such as a browser extension or phone app.
Custodial account
An account where a business holds the keys on your behalf — most commonly an exchange account.
More in Wallets
Guides that use this term
Trying to work out what happened to your funds?
The first review is free and we set out scope and price in writing before any paid work.