What is a crypto wallet?
A crypto wallet doesn’t actually “store” your Bitcoin. It stores the private keys that give you control over your coins on the blockchain. Whoever controls the keys controls the money.
Exchange Wallets (CoinSpot, Binance, CoinJar)
When you buy Bitcoin on an exchange, it is usually held in a wallet controlled by that exchange.
Pros
- Extremely easy for beginners
- No setup or technical knowledge required
- Instant access for buying and selling
- Password recovery if you forget your login
Cons
- You don’t fully control your private keys
- Funds rely on the security of the exchange
- Accounts can be frozen or limited
Software Wallets (Mobile & Desktop)
Software wallets are apps that give you direct control over your private keys while still being easy to use.
Pros
- You control your own keys
- Good balance between security and convenience
- Many are free and open-source
Cons
- Loss of recovery phrase means loss of funds
- Phones and computers can be hacked or lost
Hardware Wallets (Cold Storage)
Hardware wallets store your private keys offline and are considered the most secure option for long-term storage.
Pros
- Highest level of security
- Immune to online hacks
- Ideal for long-term investors
Cons
- Costs money to purchase
- More responsibility for backups
- Less convenient for frequent trading
Tip: Many Australians use a mix — keeping smaller amounts on exchanges for trading, and larger holdings in personal wallets for long-term storage.