What is a crypto wallet, and why do private keys matter?

A crypto wallet does not hold coins. The coins stay on the blockchain. What a wallet holds is a private key: a long secret number that proves you are allowed to move the coins at your address. Whoever has the key controls the money.

There are two main kinds. With a custodial wallet, an exchange such as Binance or Coinbase holds the key for you, much as a bank holds your deposits. It is convenient, but you depend on the exchange staying honest, solvent and online. With a self-custody wallet, an app or a small hardware device keeps the key on your side, so no company can freeze your coins, but no one can recover them for you either.

Self-custody wallets give you a recovery phrase of 12 or 24 words. Write it on paper and keep it somewhere safe and private. Never type it into a website, never photograph it, and never share it with anyone, including people claiming to be support staff. Anyone who asks for it is trying to steal from you.