Your crypto wallet is nothing more than an identifier on the blockchain. Think of it as a passport or ID card, that happens to double as a bank vault where you can store your valuables
Best not to get Into Cryptography, if we’re being honest, it makes our head hurt too. But, behind all of that math, there’s some incredible solutions that make every blockchain work. The most important of all (at least in terms of what your crypto wallet is), is Public Key Cryptography.
<aside> 🔐 Your wallet is nothing more than a unique identifier separating your on-chain activity from the millions of users inputting data into the public ledger that is your chain of choice.
To identify each unique actor, we rely on a number that points towards their private keys, no matter how many times you decode it. Think of your seed phrase (or individual private key) as the X in a basic equation. If X + public key = [your wallet], it doesn’t matter in which order you arrange the formula, the result will always point to you.
You know those decoder rings kids used to play with, right? You exchange the A for B, B for C, and so on. That’s essentially how blockchains work as well, with just some orders of magnitude more complexity.
Your Public Key is the address you share with the world, that “0x” jumble of numbers and letters. That’s just the first half of the puzzle behind your wallet. To give you full access to your wallet, you’ll need a Seed Phrase or private key.
So, in a way, your seed phrase isn’t only an access code to your wallet - it IS your wallet. The first letter of the words that compose it are turned into numbers and decoded through your public key; this combination will grant access to anyone with the keypair to act on your behalf.
By gaining access to your wallet, you’re essentially saying “[yourname] wants to swap tokens” or “buy an NFT”. With the right keypair combination, you’ll be prompted to verify a transaction, and input the code that allows you to execute any action on chain.
You may have heard the phrase “Not your key, not your coins” before. There’s a good reason for this. In web3, we’re often faced with the delicate balancing act of offering the most freedom to everyone, while keeping the experience as user-friendly as possible. To understand what a custodial wallet is, let’s compare it to their opposite:
This is one topic where there’s no escaping the math, to make it simpler to digest, here are the three key points to remember when talking about wallets: