Wallets and Private Keys

Keys, addresses, and signatures

In Web2, you log into websites with an email and password. In Web3, you connect with a wallet. Your wallet does three things:

1. Displays balances recorded on the networks it supports
2. Manages accounts and their signing keys or signing mechanisms
3. Signs transactions and messages after you authorize an action

In a self-custodial wallet, you control the keys or account permissions. Custodial services manage those controls on your behalf. A signature proves control of an account, not a person's legal identity.

Public keys and private keys

Every wallet is built on a pair of keys.

Private key → a secret number (like a password you can never change). If someone gets it, they control your money.

Public address → derived from the private key using math. You share this with anyone who wants to send you crypto. It starts with 0x on Ethereum.

The public address can be derived from the corresponding key material. Recovering a properly generated private key from its public address is computationally infeasible under the cryptographic assumptions used by the network.

The seed phrase

Managing a raw 256-bit private key is impractical. That is why wallets use a seed phrase (also called a recovery phrase): 12 or 24 English words that encode your private key.

Example seed phrase (do NOT use this - it is just for illustration):

apple banana cherry dragon eagle frost grape hollow ivory jewel kite lemon

From these 12 words, your wallet can generate your private key, your public address, and even multiple accounts. If your phone breaks, you install a new wallet app, enter the 12 words, and everything is restored.

The rule: Write your seed phrase on paper. Store it somewhere safe. Never type it into a website. Never screenshot it. Never email it. If someone asks for your seed phrase, it is a scam. No exception.

Types of wallets

Hot wallets are connected to the internet. Easy to use but more vulnerable to hacks. Use them like a wallet in your pocket - carry spending money, not your life savings.

Hardware wallets keep signing keys on a separate device. This reduces exposure to malware on the connected computer, but does not make every transaction safe. Check the address and action shown on the device before approving.

How to stay safe

Do	Do not
Write seed phrase on paper	Screenshot your seed phrase
Store backup in a safe	Keep it in a notes app or cloud
Use hardware wallet for savings	Keep large amounts in a browser wallet
Double-check addresses before sending	Rush transactions
Start with small test transactions	Send large amounts to unverified addresses
Bookmark the real website URLs	Click links from DMs or emails

Common scams to watch for:

"Connect your wallet to claim free tokens" - this is almost always a scam. The website drains your wallet when you approve the transaction.

"Send me your seed phrase to verify your wallet" - no legitimate service will ever ask for your seed phrase. Ever.

Promises of guaranteed returns are a warning sign. Do not treat unsolicited messages as evidence that a token or investment is legitimate.

Key takeaways

• Your wallet has a private key (secret, controls your funds) and a public address (shareable, receives funds).
• A seed phrase is 12 or 24 words that can restore your entire wallet. Guard it like cash.
• Hot wallets (MetaMask, Phantom) are for daily use. Cold wallets (Ledger, Trezor) are for savings.
• If you lose your seed phrase and your device, your crypto is gone. There is no password reset.