You then need your intended recipient’s Bitcoin wallet address, similar to an email address, to send the cryptocurrency to them. To send Bitcoin, you similarly need your coded key, essentially your password, to access your cryptocurrency. To send an email, you must use your password to log into your account, input a recipient’s address and then hit send. For that reason, it may be helpful to think of a Bitcoin wallet like email, says Sarah Shtylman, fintech and blockchain counsel with Perkins Coie. How Does a Bitcoin Wallet Work?īecause Bitcoin operates on a secure digital ledger called blockchain, using a Bitcoin wallet isn’t as simple as opening a leather flap. Among other things, these may allow you to loan out your cryptocurrency to earn interest on your holdings. Some just support basic transactions while others include additional features, like built-in access to blockchain-based decentralized applications commonly known as dapps.

With a crypto wallet, you can store, send and receive different coins and tokens. Think of it like a password on an online bank account. Bitcoin wallets not only hold your digital coins, but they also secure them with a unique private key that ensures that only you, and anyone you give the code to, can open your Bitcoin wallet.

“A Bitcoin wallet (and any crypto wallet, for that matter) is a digital wallet storing the encryption material giving access to a Bitcoin public address and enabling transactions,” says Alexandre Kech, CEO of Onchain Custodian, a custody service for digital assets.

What Is a Bitcoin Wallet?Ī Bitcoin wallet is a digital wallet that can hold Bitcoin as well as other cryptocurrencies, like Ethereum or XRP. Luckily, crypto wallets generally work just like physical billfolds-they keep up with your cryptocurrencies and store the information proving ownership of any tokens you hold in it. That’s why when you start buying Bitcoin, you’ll also need to begin using a Bitcoin wallet. Even though Bitcoin only exists digitally, you’ve still got to keep it somewhere, whether you’re hoping to use it to buy goods or services today or to invest it for the long term.

Blockchain wallet account