A crypto wallet is a place where an investor can keep their cryptocurrencies safe. If we equate crypto exchanges to banks, then crypto wallets can be equated to the lockers you have at home, that you have full control over.

In technical terms, There are two kinds of wallets:

Custodian Wallets: Custodian wallets are basically wallets where someone else is responsible for managing and keeping your funds safe. Usually, the exchange is your custodian, which holds your keys and is tasked with securely storing your funds. It is crucial that you use a reputable custodial wallet, such as those offered by major crypto exchanges.

Non-custodian Wallets: A non-custodial wallet is a decentralized type of wallet, where the customer owns its private keys. The user gets a file with private keys and needs to write down a mnemonic phrase with which they will be able to restore their funds. Having private keys means that you have full control over the funds.

Here's what different keys mean:

Public Key

• The public key is a randomly generated string that can be used to receive funds.
• It's like a username that identifies your account in the public ledger.

Private Key

• The private key is a randomly generated string that is used to sign transactions and verify users.
• It's like a password of the safe where all your coins are stored and should not be shared with anyone.

Types of Wallets

There are mainly two types of wallets:

1. Hardware Wallets

• Hardware wallets are physical devices that store your private keys offline.
• They cannot be hacked easily and are safe from malware.
• A connection with a PC/phone is a must while accessing the coins.
• eg. Ledger Nano S

2. Web Wallets