Hosted Wallet

What Is a Hosted Wallet?

A hosted cryptocurrency wallet is a digital wallet that stores your private keys. In return, the wallet manages your funds' backup and security. Furthermore, a hosted wallet is maintained by a third-party provider.

Understanding the Full Scope of a Hosted Wallet

A hosted wallet is much more like traditional banking apps than other crypto wallets. You can easily regain access to your assets, even if you forget your password, mnemonic phrase, or phone. Many sorts of wallets do not have this option. You would end up losing all your funds if you lose access to your credentials or even a device on which the wallet is installed.

Difference Between Personal Wallets and Hosted Wallets

Many businesses provide Bitcoin wallet services and apps to assist you in storing your bitcoins. However, it is not often evident to the layman whether these companies provide a personal wallet or a hosted wallet. Only you can have access to the private keys in a personal wallet. 

Your bitcoins are not controlled by the firm that produced the software. Meanwhile, with a hosted wallet, a third party knows about your private keys but does not disclose them to you. Still, the company will transmit, receive, and keep bitcoins on your behalf (similar to how a typical bank saves your cash in a vault but does not provide you with the keys to access it). 

Some businesses also provide software as a service. In this situation, they host the wallet software but not the private keys on their systems. As a result, users can easily use their private keys to log in, send or receive bitcoins, and track Bitcoin transactions (which the company never receives). Since the private keys are not hosted, we describe such services as online personal wallets.