FOUNDATIONS · 8 MIN

A wallet is not a bank account

A wallet does not hold coins the way an account holds a balance. It holds —or lets you use— the keys that authorize activity on a network. That difference explains many of crypto’s most expensive mistakes.

What you actually control

With a self-custody wallet you control a private key. The network records assets against addresses and accepts transactions signed with that key. Anyone who obtains the key or recovery phrase can sign as you.

With a custodial exchange, the platform controls the keys and records an internal balance for you. It is simpler, but adds counterparty, withdrawal and account-access risk.

Recovery that works

The best backup is not the most elaborate one. It is the one you can restore without exposing it. Test the process with an empty wallet before you depend on it.

Do not photograph or cloud-store a seed phrase.
Verify the domain and destination before signing.
Use a small transfer to validate network and address.
Separate operating funds from long-term storage.

The useful question

Before moving funds, ask who can authorize the transaction, what happens if the device is lost and how you would detect a malicious signature. If an answer depends on remembering a secret, the plan is not finished.