Wallets, keys and custody

The coins are on the ledger. Your wallet holds a private key, a very large secret number, and the key is what proves you may move what the ledger assigns to your address. Whoever has the key has the coins. There is no account, no password reset and no support line.

The seed phrase

Modern wallets derive all their keys from twelve or twenty-four words. Those words are the wallet. Write them down and anyone who reads them owns your coins. Lose them and, if the device fails, so do you.

Paper burns and fades. Steel plates that you stamp the words into cost less than a dinner and survive a house fire. Two copies, two separate secure places, is the standard advice for a reason.

Never photograph the words. Never type them into anything except a wallet you are deliberately restoring. Never enter them on a website, for any reason, ever. Every request to do so is a theft in progress.

Hot, cold and hardware

Hot wallet: software on a phone or computer that is online. Convenient, exposed to malware. Fine for small amounts.

Hardware wallet: a dedicated device that keeps the key offline and signs transactions internally, showing you what you are signing on its own screen. The standard for anything you would be upset to lose.

Cold storage: keys generated and kept on a device that has never been online.

Custodial: an exchange holds the key. You have an account and a legal claim, and you depend on the company. A licensed provider that segregates client assets is meaningfully safer than one that does not.

The attack that actually gets people

Not hacking. Phishing. A convincing site, a message from support that is not support, an airdrop that asks you to connect and approve. The approval you sign gives a contract permission to move your tokens, and it is irreversible.

The defence is reading what you sign on the hardware wallet screen, not on the website, and being suspicious of urgency. Genuine services never need your seed phrase and never message you first.

The two things almost nobody does

Test the backup. Wipe the device and restore from the phrase while the amount is small. A backup that has never been restored is a hypothesis.

Plan for death. Write instructions that let an heir find and use the backup, without those instructions themselves being a key. Held with a lawyer or in a sealed envelope. This is the most common way long-term holdings are permanently lost and the easiest to prevent.