What is a bitcoin wallet? Keys, addresses, and who holds them in each wallet type
What is a bitcoin wallet?
A bitcoin wallet is software or a device that holds private keys and signs transactions; the coins stay on the blockchain. Bitcoin.org splits wallets by where the keys live. 24 of the 30 wallets on the CryptoGuardz register name Bitcoin among their chains.
Piece published Reviewed by CryptoGuardz Register Desk, editorial desk
A bitcoin wallet is a program or device that holds the private keys needed to spend bitcoin and uses them to sign payments. The coins never sit inside it: they are entries on the public blockchain, and the wallet holds the proof of ownership. Of the 30 wallets on the CryptoGuardz register, 24 name Bitcoin among their supported chains, and they differ most in who holds the keys.
Definitions below come from bitcoin.org and the Bitcoin developer guide, read on 14 October 2026. Wallet details come from each wallet's terms as recorded on the register. Setup steps are in a separate guide, how to set up a bitcoin wallet. Nothing here is investment advice.
What is a bitcoin wallet, by definition?
Bitcoin.org's vocabulary page calls it "loosely the equivalent of a physical wallet on the Bitcoin network", then corrects the analogy in the next breath:
The wallet actually contains your private key(s) which allow you to spend the bitcoins allocated to it in the blockchain.
The developer guide is stricter: "A Bitcoin wallet can refer to either a wallet program or a wallet file." The program is the app. The file, or the recovery phrase that rebuilds it, is the part that holds value. Delete the app and keep the phrase, and the bitcoin is still spendable. Keep the app and lose the phrase and the phone, and it is not.
What are private keys and addresses?
Two halves of the same account. A private key, per bitcoin.org, "is a secret piece of data that proves your right to spend bitcoins from a specific wallet" through a cryptographic signature. When the wallet signs, the network can check the signature against the coins being spent, and "there is no way for the world to guess your private key".
An address is what the wallet hands out to get paid. Bitcoin.org: "It is the only information you need to provide for someone to pay you with Bitcoin." Two details catch people out. Every balance is public: "anyone can see the balance and transactions of any Bitcoin address". And bitcoin.org says that, for privacy, "an address should ideally be used only once to receive funds", which is why most wallets show a fresh address on each receive. What a casino or exchange can see from that trail is in is bitcoin untraceable.
Modern wallets derive all their keys from one recovery phrase of 12 to 24 words, under the BIP-39 standard. That phrase is the wallet in practice; what is a seed phrase covers how.
What does a bitcoin wallet actually do?
Three jobs, which the developer guide names as separable: "a public key distribution program, a signing program, and a networked program." It hands out addresses, signs transactions, and broadcasts them. Wallet types differ in how many of those jobs run on an internet-connected device.
Bitcoin itself is divisible: "One bitcoin is equal to 100,000,000 satoshis", and a satoshi "is the smallest unit of bitcoin recorded on the blockchain." Wallets show balances in BTC, sats or both.
What are the types of bitcoin wallet?
Four, sorted by where the private keys sit.
| Type | Keys held by | Keys on an online device | Register example |
|---|---|---|---|
| Full-service app | User | Yes | Sparrow, Exodus |
| Hardware wallet | User | No, on the device | Trezor, Ledger |
| Shared-key (MPC) | User and provider | Split | Zengo |
| Custodial | Provider | Provider's systems | Wallet in Telegram |
The developer guide on the first row: "The main disadvantage of full-service wallets is that they store the private keys on a device connected to the Internet." On the second: "Hardware wallets are devices dedicated to running a signing-only wallet." Hardware prices and failures are in what is a hardware wallet.
The third row is newer. Zengo's agreement, as recorded on the register, says "our servers hold a key share" and "Only when both Shares interact, a Transaction can take place." The fourth row is an account, not a wallet in the bitcoin.org sense: Wallet in Telegram's agreement puts the security burden on "your Telegram account", because the provider holds the keys.
Custodial vs self-custody: what changes?
Who can move the money, and who can stop it. Bitcoin.org states the self-custody side: "When you hold your own private keys, you control your bitcoin", and the user alone answers for losing them. Ledger's terms, as recorded on the register, describe the same model from the provider's side: "Unless you subscribe to a third-party recovery service, no one is in a position to help you retrieve wallet access."
Custody shifts both powers to the provider. It can restore an account after a lost password, and it can freeze or close one under its terms. Bitcoin.org's security page opens on that risk: "You should be wary of any service designed to hold your money online." Exchange accounts are custodial by design; their withdrawal and freeze clauses are on the exchange register.
The one rule that holds across all four types: "A Bitcoin transaction cannot be reversed, it can only be refunded by the person receiving the funds." No wallet type changes that. A payment sent to a scammer is gone unless the scammer returns it, and offers to "recover" it for a fee are covered on the scam recovery page.
What this does not show
How each of the 24 Bitcoin wallets builds addresses, such as SegWit or Taproot formats: not measured on the register. Whether any provider's key share has been compromised: no incident is recorded against one. The register records documents, not tests of the apps.
Quick answers
What is a bitcoin wallet?
A program or device that holds the private keys for bitcoin and signs payments with them. Bitcoin.org: the wallet "actually contains your private key(s)". 24 of 30 wallets on the register support Bitcoin.
Does a bitcoin wallet store bitcoin?
No. The coins are recorded on the blockchain; the wallet holds the keys that can spend them. Restoring the 12 to 24 word recovery phrase in another app restores access.
What is the difference between a custodial and a self-custody wallet?
In a self-custody wallet the user holds the keys and nobody can restore them. In a custodial one the provider holds them and can freeze the account. See cold vs hot wallets.
Can a bitcoin payment be reversed?
No. Bitcoin.org says a transaction "can only be refunded by the person receiving the funds". One bitcoin is 100,000,000 satoshis, and each one sent is final once confirmed.
Sources
- Bitcoin.org, vocabulary, retrieved 14 October 2026
- Bitcoin.org, some things you need to know, retrieved 14 October 2026
- Bitcoin.org, secure your wallet, retrieved 14 October 2026
- Bitcoin developer guide, wallets, retrieved 14 October 2026
- BIP-39, mnemonic code for generating deterministic keys, as cited on this site 2026-10-09
- Ledger Wallet terms of use, as recorded on the wallet register 2026-09-28
- Wallet in Telegram user agreement, as recorded on the wallet register 2026-09-28
- Zengo user agreement, as recorded on the wallet register 2026-10-07
- CryptoGuardz wallet register, chains named by each wallet
About this piece
Compiled by the CryptoGuardz register team from the sources listed above. Research and drafting are AI-assisted and reviewed by a named editor before publication. Nothing here is a recommendation to gamble. If a figure or a reading is wrong, tell us and the correction is logged in public.