Understanding Crypto Wallets

A is a software program or physical device that allows you to interact securely with a blockchain network.

Despite its name, a wallet doesn’t actually store your crypto like cash in a physical wallet. Instead, your crypto exists as transaction records on the —a decentralised ledger recorded across thousands of computers worldwide. When you “own” , you’re actually controlling specific entries in this public ledger that prove you received those funds.

Your wallet’s job is to safeguard your private keys, the unique digital credentials that give you access to and control over your blockchain assets. Every time you send crypto, your private key signs the transaction, proving you’re the rightful owner. 

Every wallet has a unique set of :

• A public key is like a bank account number, which means you can share its address freely with others to receive cryptocurrency. The that you actually share (like what appears in QR codes) is a shorter, more user-friendly version derived from your public key. It’s practically impossible to reverse-engineer the private key from either the public key or wallet address.

• A private key works like a password or a PIN for your bank account. It grants you access to your funds and authorizes, or “signs,” outgoing transactions. You must keep your secret at all times, because anyone who has it can control your crypto.

Because the wallet holds the keys that prove your ownership, you use it as the primary tool for sending, receiving, and monitoring your .

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Hot Wallet, Cold Wallet, or Both?

Choosing between a hot wallet, a cold wallet, or a combination of both comes down to a wallet’s connection to the internet. This single factor creates the most critical trade-off in accessing and securing your crypto, which is convenience versus security.

Hot Wallet

A is any wallet that is connected to the internet. This includes mobile, , and web-based wallets. Their constant connectivity makes them convenient for frequent trading and daily transactions. 

However, this also makes them more vulnerable to online threats, such as hacking and malware. Think of a hot wallet like a checking account or the cash you carry in your pocket—great for spending, but you wouldn’t keep your life savings in it.

Cold Wallet

A , on the other hand, stores your private keys completely offline, typically on a physical hardware device. By keeping your keys isolated from the internet, a cold wallet provides the highest level of security against online hacking and malware. This makes it the ideal choice for storing large amounts of for long periods. 

Many users adopt a hybrid approach: using a hot wallet for small, everyday amounts and a secure cold wallet for long-term holdings.

Custodial vs. Non-Custodial Wallets

Hot wallets come with an important choice: who controls your private keys? You can use custodial wallets (where a third-party manages your keys) or (where you manage them yourself). Cold wallets, by their nature, are always non-custodial since you physically control the storage.

Custodial Wallets

Custodial wallets are managed by a third party, such as a , which holds your private keys on your behalf. For many beginners, this is the most common starting point.

This is where local crypto regulations provide additional security for peace of mind. In Singapore, the Monetary Authority of Singapore (MAS) regulates companies offering digital payment token (DPT) services under the Payment Services Act 2019. This means that when you use a custodial wallet on a MAS-compliant exchange, that provider must adhere to strict security and consumer protection standards.

• Pros: They are user-friendly, and account recovery is often possible if you lose your password. They are also convenient for buying and selling crypto with .

• Cons: You’re entrusting a third party with your assets, which means you’re exposed to risks like , business failures, or frozen accounts. Additionally, these wallets typically don’t allow interaction with —blockchain-based apps that work without central control—which limits your access to the broader crypto ecosystem.

While custodial wallets involve third-party risk, selecting a trusted and reputable provider significantly reduces these concerns. Gemini currently holds an In-Principle Approval for the Major Payment Institution license from MAS.

Non-Custodial Wallets

Non-custodial wallets give you complete and exclusive control over your private keys. You act as your own bank, directly managing and securing access to your cryptocurrency without the need for intermediaries. 

Because you are your own custodian, the software itself is not regulated by MAS in the same way a custodial service provider is. The responsibility for securing and backing up private keys rests entirely with you. 

Non-custodial wallets also generate a (also called a seed phrase) - typically 12 to 24 words that can restore access to your wallet if you lose your device. This phrase is essentially a human-readable version of your private keys.

Pros:

• You have complete control over your funds, eliminating custodial risk.

• They are essential for interacting with the full ecosystem of , including protocols, NFTs, and dApps.

• They offer a higher level of privacy and anonymity.

Cons:

• You hold total responsibility for securing your private keys and recovery phrase; losing them means permanent loss of funds without recourse.

• The initial setup and management may require more technical knowledge

Different Types of Crypto Wallets

Now that you understand the different types of crypto wallets ( and ), let’s examine some examples of crypto wallets. These concrete options combine the properties we’ve discussed: a mobile wallet app is a hot, non-custodial wallet, while an exchange account is a hot, custodial wallet.

It’s also worth noting that different wallet types handle transaction fees differently. All crypto transactions require network fees (paid to miners or validators), but some wallets let you customize these fees for faster or cheaper transfers, while others set them automatically. Additionally, some custodial wallets may charge their own service fees in addition to network fees.

Software Wallets (Hot Wallets)

are based on software that is installed on your computer or smartphone, or accessed via a web browser. They are popular for their convenience and ease of use.

• Desktop Wallets: These are programs that store your private keys on your computer’s hard drive.

• Mobile Wallets: These are smartphone apps that enable you to manage your assets on the go, often utilizing QR codes for seamless transactions.

• Web Wallets: These often come as browser extensions, such as MetaMask, and offer the fastest way to connect to dApps.

Hardware Wallets (Cold Wallets)

are secure physical devices, often resembling a larger USB drive, that are explicitly designed to store private keys offline. They are widely considered the most secure method for managing . When you make a transaction, it is signed securely on the device itself, so your keys are never exposed to your internet-connected computer. Popular brands include Ledger and Trezor.

Paper Wallets (Cold Wallets)

A is a physical document with your public and private keys printed on it. While this method was once popular for keeping keys completely offline, paper wallets are now considered unreliable and obsolete due to their vulnerability to physical damage, loss, and user error. You may still see paper wallets mentioned in older guides or forums, but modern hardware wallets provide the same offline security with much better usability and recovery options.

Which Crypto Wallet Is Right for You?

Determining the best crypto wallet depends entirely on your goals, as there is no one-size-fits-all solution. By understanding your priorities—whether security, convenience, or interaction with blockchain applications—you can choose the right tool for the job.

Many experienced users adopt a hybrid strategy to get the best of both worlds. They might use an exchange wallet for trading, a software wallet for daily Web3 interactions, and a hardware wallet for their long-term savings.

Wallet Security Best Practices

Regardless of which wallet you choose, securing your assets is your most important responsibility. Following a few can protect you from the most common risks.

• Guard Your Recovery Phrase. For non-custodial wallets, your seed or recovery phrase is the master key to all your funds. Write it down and store it in a secure, offline location where no one can find it. Never store it digitally as a photo, in a cloud drive, or in a password manager.

• Use Strong Passwords and 2FA. For any custodial exchange account or wallet application, use a strong, unique password. Always enable for an extra layer of protection against unauthorized access.

• Beware of Phishing Attacks. Be suspicious of unsolicited emails, links, or messages asking for your private keys, recovery phrase, or password. No legitimate service will ever ask for this information.

• Buy Hardware from Trusted Sources. If you purchase a hardware wallet, only buy it directly from the manufacturer or an official, reputable vendor. This helps you avoid the risk of purchasing a compromised or tampered device.

• Use a VPN for Added Privacy. Using a encrypts your online activity and masks your location. This adds a layer of privacy and is especially important when accessing your wallet on public Wi-Fi networks.

Choose the Best Crypto Wallet For Your Needs

Choosing which wallets to use doesn’t have a one-size-fits-all answer. Most crypto enthusiasts use a combination of wallets: an exchange wallet, a mobile wallet, and a hardware wallet. 

Fund your account in SGD, make your first trade, and master the basics within our secure custodial wallet. Gemini manages the critical compliance layer—including KYC, , and withdrawal address verification—serving as your reliable gateway to eventually moving assets into self-custody.

As your portfolio grows, layer your security: enable allowlists, keep a clear transaction history, and shift more funds into cold storage, while relying on Gemini for on-ramps, liquidity, and everyday transfers.