Wallet

A wallet is a software application or physical device that stores and manages public and private cryptographic keys associated with a blockchain address. Its main function is to securely sign transactions, validating the user's authorization to move funds or interact with smart contracts, and read the blockchain status associated with that address.

There are different types of wallets, classified mainly by their level of connection and security:

1. Hot Wallets (hot wallets)
   • Always connected to the internet.
   • Fast and convenient to operate.
   • Examples: MetaMask, Trust Wallet, Rainbow, Phantom.
   • Increased exposure to attacks if the device is compromised.
2. Cold Wallets (cold wallets)
   • Disconnected physical devices or environments.
   • They offer greater security, ideal for long-term storage.
   • Examples: Ledger, Trezor, paper (paper wallet), air storage (air-gapped).
3. Custodial vs Non-Custodial
   • Custodial: The private key is managed by a third party (e.g. exchange such as Binance).
   • Non-Custodial: the user maintains complete control of their keys and funds.
4. Smart Contract Wallets
   • They are smart contracts that act as wallets (e.g. Safe, Argent, Capsule).
   • They allow advanced features such as Multisig, social recovery, spending limits or scheduled execution.

A wallet does not store cryptocurrency itself, but it allows you to interact with them, since assets exist on the blockchain. What is really saved are the private keys, which grant control over those assets. If a user loses the private key (or the recovery seed), irreversibly loses access.

Wallets also allow:

• Connect to dApps in Web3.
• Digitally sign messages or authentications (login without password).
• Participate in voting or DAOs, using governance tokens.