A crypto wallet is the software or hardware that stores the keys used to access and move cryptocurrency. Despite the name, it does not hold coins the way a physical wallet holds cash — the coins live on the blockchain, and the wallet holds the keys that prove they are yours.
Wallets come in two broad types. "Hot" wallets stay connected to the internet for convenience, while "cold" wallets keep keys offline for security. A further distinction is custody: with a self-custody wallet you alone hold the keys, whereas an exchange wallet means a third party holds them for you.
The choice is a trade-off between convenience and control. Self-custody removes reliance on any company but puts the full burden of security and backup on you — lose the keys and no one can recover them.
Worked example
A hot wallet on a phone is handy for small, frequent spending; a cold wallet suits long-term savings you rarely touch.
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This definition is general education, not investment advice. Markets — especially crypto — are volatile and you can lose money. Please read our disclaimer and see our methodology.