Contrary to popular belief, cryptocurrency wallets are not designed to actually store cryptocurrencies, instead they provide the tools necessary for interacting with the blockchain network. In other words, these wallets can generate the necessary data to send and receive cryptocurrency using transactions. Among other things, this data consists of one or more pairs of public and private keys.
The wallet also includes a public address, which is an identifier in the form of a set of letters and numbers, which is generated based on the public and private keys. The public address is a kind of location on the blockchain where you can send coins. This means that you can share your public address with another user to receive funds, but you should never show your private key to anyone.
A private key provides access to your cryptocurrencies, regardless of which wallet you use. Thus, even if your computer or smartphone has been compromised, you can still access your funds from any other device, provided that you have the corresponding private key (or seed phrase).
Wallets for storing cryptocurrencies may vary depending on how they work on “hot” and “cold” ones.
A hot wallet is any type of wallet that is connected to the Internet. For example, when you create an account on the exchange and send funds to your account, you make a deposit to the hot wallet of this exchange.
In turn, cold wallets do not have an Internet connection. Instead, they use physical media to store keys offline, which makes them more resistant to cracking. Thus, this type of wallet is a safer alternative for storing your coins.