A crypto wallet is software or hardware that helps you manage cryptocurrency. It does not usually store coins inside the wallet like cash in a pocket. Instead, it stores the keys used to access assets recorded on a blockchain.
Types of crypto wallets
A hot wallet is connected to the internet and is convenient for daily use. A cold wallet is kept offline and is usually safer for long-term storage. A custodial wallet is controlled by a company, while a non-custodial wallet gives the user control of the private keys.
Why wallet security matters
If someone gets your private key or seed phrase, they may be able to move your funds. If you lose them in a non-custodial wallet, recovery may be impossible.
A wallet should be chosen based on how often you transact, how much risk you can accept, and whether you want convenience or stronger self-custody.