What Is a Crypto Wallet?
The most important concept in on-chain finance. Explained simply.
Not a Wallet Like You Think
A crypto wallet does not store your assets the way a physical wallet stores cash.
Your crypto assets always live on the blockchain. A crypto wallet stores the private key — the cryptographic secret that proves you have the right to move those assets. The wallet is more like a key than a container.
The Three Things a Wallet Does
1. Stores your private key — This is the only thing that actually gives you control over your assets. Whoever has the private key controls the assets. This is why "not your keys, not your coins" is the most important rule in crypto.
2. Signs transactions — When you want to move assets or interact with a protocol, your wallet signs the transaction with your private key. This proves you authorized the action without revealing your key.
3. Gives you an address — Your wallet address is your on-chain identity. It is a string of letters and numbers (like 0xAbCd...) that represents you on the blockchain. Think of it like an email address — anyone can send assets to it, but only you (with your private key) can send from it.
Custodial vs Non-Custodial
Custodial wallet — A company (like Coinbase or Binance) holds your private key on your behalf. Convenient, but you are trusting them to keep it safe and not block your access.
Non-custodial wallet — You hold your own private key. Nobody can freeze your account or block your transactions. This is what Terminal One uses — your wallet, your keys, your assets.
Seed Phrases
When you create a non-custodial wallet, you are given a seed phrase — usually 12 or 24 random words. This is a human-readable version of your private key.
Write it down. Store it offline. Never share it with anyone. Never enter it on a website. Whoever has your seed phrase has complete control over everything in your wallet.
How Terminal One Uses Your Wallet
When you connect to Terminal One:
- You authorize the connection (no cost)
- You sign a message to prove ownership (no cost)
- When you trade, you sign the transaction (gas cost)
Terminal One never has access to your private key. It can only see what is publicly visible on the blockchain.