Where is cryptocurrency stored?

Despite the common misconception, currency is not stored in cryptocurrency wallets. Cryptocurrencies are stored in blockchain account ledgers.

Most ledgers are public (anyone can view them), but some are private. The ledgers are duplicated on 1000s of computer systems distributed around the world. This replication is done to ensure that the ledger stays truthful. Most of the computer systems that participate in hosting the ledgers are owned by cryptocurrency miners.

Unlike traditional fiat currency (like the US Dollar), cryptocurrencies have no physical manifestation (you can’t actually touch them). They only exist in electronic (or “virtual”) form.

Although they are not directly stored in wallets, you do need a wallet to use your currency. These wallets contain unique code numbers, called private keys. It is the private keys that only you and your wallet know that prove your ownership of your currency.  The wallet with proper keys allows owners of the currency to transfer or spend their currency.  They do this by sending “spend/send” messages to the globally distributed account ledger.

Via the mathematical miracle of private key cryptography no one can steal your funds without knowing your unique special private key.