Part Two — Keys

Anchor tracks: You Need A Wallet, All In

The reader's question: what am I actually holding?

This is the most important chapter in the book. Everything downstream depends on it.

⚠️ No legitimate service will ever ask for your seed phrase. Not support. Not a wallet company. Not an exchange. Not anyone claiming to help you recover funds. Nothing in this book asks you to type a seed phrase anywhere, and no exercise in any workshop will either.

1. A wallet is not an account

Start by unlearning the word.

A wallet does not hold coins. Your coins are entries on the public ledger, and they stay there. What the wallet holds is the key that proves those entries are yours and authorises moving them.

That distinction sounds academic until you notice what follows from it.

There is no account. There is no username. There is no password to reset, because there is no company holding a record of you. Nobody issued the wallet, nobody can suspend it, and nobody knows it belongs to you. If you lose access, there is no "forgot password" link, because there is nobody on the other end of it to ask.

A bank account is a relationship with an institution. A wallet is a fact about mathematics. The institution can help you; the mathematics cannot.

This is the whole ballgame, as track 2 puts it. Everything people find shocking about crypto losses traces back to expecting the first thing and having the second.

2. Public and private keys

Your wallet contains a pair.

The public key produces your address — the string you give people so they can send you funds. Share it freely. It is designed to be public, and it reveals nothing that lets anyone spend.

The private key is what authorises spending. Never share it, never type it anywhere, never photograph it. Anyone who has it has your funds, immediately and irreversibly.

The relationship between them is one-way: the address can be derived from the key, and the key cannot be worked backwards from the address. That asymmetry is the entire security model.

One consequence people find surprising: your address is public and so is your balance. Anyone with your address can see everything you hold and every transaction you have ever made. Nothing is hidden. If someone links your name to your address, they have linked your name to your net worth, permanently. Part Four returns to why that matters.

3. The seed phrase

In practice you will rarely handle a raw private key. You will handle a seed phrase — usually 12 or 24 ordinary words, in a specific order.

Those words are not a hint, a backup, or a password. They are the wallet. From them, every key can be regenerated on any device, anywhere, by anyone.

Read that again, because it is the sentence this chapter exists for. Whoever has the words has the money. No second factor, no identity check, no delay, no confirmation email. The words are sufficient.

This is why the safety notice at the top of this chapter is not boilerplate. Every legitimate wallet shows you the phrase once, during setup, and never asks for it again. Any prompt to enter your phrase — into a website, an app, a support chat, a form, a "wallet validation" tool, a "recovery service" — is theft in progress, with no exceptions, ever.

If you take one thing from this entire book, take that.

4. Hot, cold, hardware

Wallets differ in one respect that matters: whether the keys have ever touched an internet-connected device.

Hot wallets are apps and browser extensions on a device that is online. Convenient, free, and appropriate for spending money. If that device is compromised, so is the wallet.

Cold wallets keep keys on something that has never been online. An attacker who fully controls your computer still cannot sign a transaction, because the key is not there to steal.

Hardware wallets are the practical form of cold storage — a small dedicated device that signs transactions internally and never exposes the key, even to the computer it is plugged into.

The marketing around these is heavy. The honest summary is short: keep spending money hot and savings cold. Use a hot wallet for the amounts you would be annoyed to lose and a hardware wallet for the amounts you could not afford to lose. Most people need exactly this and nothing more elaborate.

Two purchasing rules, both learned expensively by other people:

Buy direct from the manufacturer. Never a marketplace reseller, never second-hand. Tampered devices are a real attack.
Generate the phrase yourself, on the device. If a device arrives with a phrase already printed in the box, it is a trap and the funds will be taken the moment you use it. Legitimate devices never ship with a pre-set phrase.

5. Storing it

The phrase has two failure modes, and they pull in opposite directions. It can be stolen, which argues for hiding it. It can be lost, which argues for copies. Good storage solves both at once, and most bad storage solves one by making the other worse.

Where not to put it — this list is not theoretical. These are the most common ways people are robbed:

A photo on your phone (which syncs to the cloud automatically)
A note in a notes app (which also syncs)
An email to yourself
A password manager entry, a cloud document, a screenshot
A text message to a partner
Anywhere it can be read from a screen someone might see or photograph

The pattern is the same in every case: the phrase ends up somewhere that is convenient because it is accessible, and accessible is the problem. None of these require an attacker to break any cryptography. They require an attacker to breach one cloud account, and cloud accounts are breached constantly.

Where to put it:

Written on paper, by hand
Stamped into metal if the amount justifies it — paper does not survive fire or flood
Two copies, in two separate buildings. One copy is a single point of failure; that is how house moves, floods, and tidy-ups end wallets
Somewhere you would not casually mention

Then do the part almost nobody does: test it. Set up a wallet, write down the phrase, send a trivial amount, then wipe the wallet and restore it from your written copy. If the restore works, you have a real backup. If it does not, you have found out while it cost you nothing.

An untested backup is an assumption, not a backup.

6. Wallets for other people

Two situations that most guides skip entirely.

Setting one up for a child or a parent. The wallet is easy; the phrase is the whole problem. A phrase a child can reach is a phrase a child can lose or show someone. A phrase they cannot reach is one they do not really control. For a young child, hold it yourself and treat it as part of your own estate. For a parent or a less technical adult, set it up together, write the phrase together, and be explicit that you will never call and ask for it — so that when someone else does, the call is obviously wrong.

The inheritance problem. This is the one nobody plans for and it is entirely predictable.

Crypto has no next of kin process. No probate route, no death certificate to present, no institution to write to. If you die without a plan, your funds do not go to your family — they simply cease to exist for everyone. This is not a rare edge case. It is the default outcome.

A workable plan has three parts and does not require a lawyer:

A written record of what exists and where — which wallets, which devices, which exchanges. Not the phrase itself. Just the map.
The phrase stored separately, with instructions for how to reach it that make sense to someone who does not know what a seed phrase is.
One trusted person who knows the map exists and where to find it.

For larger amounts, a multisig wallet requiring two of three keys is the cleaner answer — you hold one, a trusted person holds one, and the third sits somewhere safe. No single key loss ends it, and no single person can take it alone.

Whatever you choose, write it in plain language for someone with no background. The instructions have to work for a person who is grieving and has never heard of any of this.

Hard constraint

Nothing in this chapter ever instructs the reader to type a seed phrase anywhere. Demonstrations use testnet or view-only wallets. No exceptions, including in live workshops.

Written outcome

You have a wallet, you have stored the phrase somewhere you can defend, and you can say out loud what happens if you lose it.

If you cannot answer that last one without hedging, go back to section 5 before moving on.

Next: Part Three is how funds get in and out — and what you are trusting at each step.