When I buy crypto, where does it actually live?

bitcoin paypal support

When it comes to traditional money, it’s easy to see where it is. It exists physically in cash or it’s in your bank account, where you can draw it out from an ATM or as cash-back. With digital currencies like Bitcoin, it’s a little different. While you CAN withdraw from Bitcoin ATMs, the location of where your coins are stored is slightly more nuanced.

You own your private key, not quite the “crypto”

The important thing when owning cryptocurrency is that when you own cryptocurrencies, what you really own is the key to the account that houses the cryptocurrency. Your coins are associated with two sets of keys:

The private key

Your cryptocurrency private key works like a real key. It is unique and is designed to unlock what’s inside. A private key in crypto is private because it offers access to the cryptocurrency inside an account or wallet. It’s like a bank password: Keeping it private keeps the funds inside safe.

The public key

Your public key is like a bank number that you give out so that people can send you money. It doesn’t need to stay private and no one can get to your private key through your public address.

Together, your private keys and your public keys let you access your crypto and provide a way for the receipt of crypto funds.

When you buy crypto or are sent crypto, your cryptocurrency holdings are not actually kept or stored anywhere. Because they’re a digital asset, they are not represented by any tangible asset. Instead of holding cryptocurrency, you hold the keys that are associated with cryptocurrency. If you use an online wallet, the log-in information gives you access to the associated cryptocurrency with your keys and if you use a hardware wallet, the same applies: You own the keys and those keys grant you access to use the cryptocurrency in the account.

Related Articles

Which celebrities have NFT collections?

NFTs have exploded over the last two years, with figures in the industry and beyond releasing and buying digital collections.

Which celebrities advocate Bitcoin and cryptocurrencies?

Beyond leading figures in the cryptocurrency industry, there are high profile names that are interested in Bitcoin, cryptocurrency, and...

Has the bear run in cryptocurrency come to an end?

Crypto investors and traders are weary of another downturn but signs might point that the bear run has come to an end.

What are cryptocurrency exchange tokens?

In this, we look at some of the most popular cryptocurrency exchange tokens, their price movement, usefulness, and general usage.

See All