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Learn how crypto wallets work, the differences between hot, cold, and hardware wallets, and how to choose the right option for online casino use.
Jan 8, 2026
If you have cryptocurrency and want to use it for online casinos, you’ll need a way to access those funds. Cryptowallets are the starting point into using blockchain technology, but there’s also misunderstanding about what crypto wallets actually are and what they really do.
It’s hard to make one to one comparisons of real world wallets to digital things, so this article will clarify the purpose of crypto wallets and their use, while also explaining the differences between the main types you’ll encounter. In a lot of ways, using crypto can be a customizable and personal experience, so we’ll also address some of the tradeoffs in terms of convenience and security that you’ll want to consider.
If you’re totally new to crypto, check out our beginner’s guide explaining everything you need to know.
Wallets don’t actually store crypto, they just hold the keys used to access them.
Hot wallets are convenient for smaller transactions, but always connected to the internet and susceptible to attacks.
Cold wallets store your keys offline, meaning more security but less convenient, making them ideal for long term storage.
Hardware wallets are a form of cold wallets, physical devices that allow users to sign transactions while maintaining security offline.
Non-custodial wallets place responsibility of keys on you.
Custodial wallets let a third party own your keys. “Not your keys, not your coins”
Crypto wallets are tools that store public and private keys used to access and manage cryptocurrencies and other digital assets on the blockchain. That’s important to remember, because wallets store the keys, while assets live and move on the blockchain. Keys are still important because they are the only way to actually access funds. The inherent nature of blockchain makes it pretty much impossible to steal funds without knowing both the private and public keys.
How the key is generated is dependent on the blockchain, but usually consists of a seed in the form of random characters. To make it easier for humans to remember, the seed is translated to a combination of twelve to twenty-four words based on the BIP-39 standard as a mnemonic device. Then this seed generates a private key based on the blockchain’s algorithmic requirements, which in turn generates a public key that is then used to generate a wallet’s address.
You can make multiple addresses for the same wallet, but they will all algorithmically be based on the same seed phrase that generated the keys in the first place.
In reality the wallet is not actually transferring assets between users. Instead, they are sending a message to the blockchain that a transaction is authorized with a private key.
Once a transaction is started, the private key authorizes it and commits a record of it to the blockchain, making it irreversible and unable to be tampered with. In a simple explanation, public keys let you transfer assets to an address, while private keys actually let you access those assets.
It’s safe to share a wallet address, but sharing keys is a dangerous risk, which is why understanding wallet security and ownership is important.
These main types of wallets can fall under two specific categories based on who actually holds the keys in the wallet.
Custodial wallets have keys that are owned and managed by a third party, like a crypto exchange, making the chance of losing said keys less likely to occur. Crypto exchanges usually offer custodial wallets with their services, and while convenient, are highly regulated by authorities and often require going through verification processes for KYC (Know Your Customer) compliance. Still, they can be a safe option if the wallet provider offers insurance for attacks and theft.
Noncustodial wallets place responsibility of managing keys on the user. Since custodial wallets hold the users private key for them, they don’t have direct access to their assets.
When the user is managing the keys, there’s more responsibility, but more security and freedom for utilizing assets whenever and however is seen fit. There is an important risk: if you lose your key, you lose your access to funds, making it necessary to be vigilant about how you manage noncustodial wallets.
On the other hand, noncustodial hardware wallets can offer strong protection from outside attacks and theft, meaning better security than using keys stored on a third party’s servers. Some casino players prefer using a form of noncustodial wallets to protect their privacy and have access to funds around the clock.
There’s a maxim in the crypto community that shows up pretty often: “Not your keys, not your crypto”. In other words, if you don’t hold the private keys but your custodian does, do you truly own your cryptocurrency?
There’s a whole debate we could get into, but it's an important consideration. The whole point of crypto, originally, was decentralization: to put control back into the users hands away from oversight of a third party. While exchanges have made crypto more accessible for those less tech savvy, it has also taken away some control and introduced more oversight into crypto, especially since these major exchanges are regulated by legal authorities.
To clarify, you don’t need to use an exchange’s wallet to purchase crypto. You could easily just use the exchange solely for purchasing currency while sending it to another address, even if it is not totally convenient. Regardless, you should keep in mind that each exchange and wallet only support certain types of crypto, which can impact the type of wallet you use and what type of currency you’re able to trade.
If you’re deciding what kind of wallet you should start with, start by considering if a custodial or non-custodial wallet suits your needs.
Hot wallets are apps that are installed on devices and require an internet connection for storing and using your private keys for accessing funds and public keys for identifying the wallet’s address.
Using wallets connected to the internet is considered DeFi activity (short for decentralized finance, which just means peer to peer transactions on blockchains), since these wallets are built specifically to interact with dApps (software built for use of blockchain). They can come in the form of apps on your phone, browser extensions, or a standalone desktop app connected to the internet.
Crypto exchanges often offer their own hot wallet services for storing keys for crypto traded off their site. You might be familiar with hot wallet providers like MetaMask, who provide noncustodial wallets, and Coinbase, who offer both a custodial wallet from their exchange and a non-custodial wallet (Coinbase Wallet).
They're really convenient for most users, being always online, making transactions easier to conduct. Because of this, crypto users find them ideal for small transactions and spending. They’re also most users' entry points to wallets because they are typically free to use and how they receive currency from exchanges. Their DeFi infrastructure gives them a lot of accessible services as well.
Since hot wallets are connected to the internet, they can be more susceptible to malicious attacks, like phishing, fake scam wallet apps, requiring more safety measures. Hot wallets are also easy ways for scammers to trick wallet owners into blindly approving and signing off on transactions.
Since some hot wallets, not all, are custodial, your wallet provider has access to your keys, meaning you don’t have as much independent control, which can be an issue if you use your wallet for something the provider does not like or allow. Due to the potential security and ownership risks, hot wallets are not suited for holding keys to large amounts of crypto over long periods of time. Casino players using hot wallets keep only a small amount of funds stored for making deposits because of these potential issues.
It’s common to use hot wallets for crypto casinos, so you should know how to use them as safely as possible. Make sure your device (desktop, laptop, or smartphone) is up to date with its operating system’s security and has antivirus/antimalware software installed. Fake wallet apps are everywhere, so double check you download the application from its actual parent site, or through a verified storefront for your smartphone. While browser extensions are popular, a lot of them fall under scams. Do your research on any extension before adding it to your browser.
Considered the more secure alternative to hot wallets, Cold wallets generate and hold a user’s private and public keys offline, either through physical or digital means. They are non-custodial by nature, since they give the user direct access to their keys.
Hardware wallets are physical devices specifically made to generate and store keys, while also being able to sign off on transactions without your private key leaving the device through a separate interface like a mobile app.
Similar to a hardware wallet, air-gapped wallets are strictly offline and use QR codes or memory cards to conduct and sign transactions. Essentially, you use your online hot wallet to create the transaction request, then use a QR code or memory card to move the request on your air-gapped wallet. From there the air gapped wallet signs off on the transaction, which is then moved back to your online wallet, from which the transaction is sent to the blockchain network.
It's a more involved, but secure process compared to the other alternatives, since your private keys are never online. However, the complexity of it can leave room for some user error. More experienced crypto users who value security and privacy opt for this method.
This is the “old school” method of cold wallets, more popular when crypto was not yet in the mainstream. Still offline, it's a literal piece of paper, or metal, with private and public keys printed out, sometimes in the form of a barcode or QR code.
While you can make your own 64 digit key, you can also generate it through an app and print it out. Generating these keys through apps, in principle, is the same as the usual generation through seeds, just done completely offline, ideally.
You can choose to use paper wallets as a back up or alone, but you also risk losing your keys permanently if the paper is misplaced or damaged. With advancements in cold wallet storage, paper wallets are now seen as a temporary method to store keys.
Cold wallets are functionally offline since they aren’t constantly connected to the internet, there is less risk of exposure to attacks and hacking. However, since they are disconnected from the internet, they can’t execute things like smart contracts for their users and its use in DeFi activity is extremely limited.This does make them less convenient than hot wallets, meaning users will store more currency over longer periods of time and not use them as frequently for transactions.
Casino players using cold wallets will generally have to transfer funds from a cold wallet to a hot wallet in order to deposit money on sites.
Yes, hardware wallets are a type of cold wallet, but there’s a lot differentiating hardware wallets from the rest.
These are a type of cold wallet that have two parts, the physical device (like a USB key) for storing keys offline, and a user interface, like an app, used for online functionality.
The physical device generates and stores keys offline and allows for users to sign transactions without being connected to the internet. However, private keys never leave the offline part of the hardware wallet, and signing transactions are done on the device, increasing their security.
The user interface is a separate app or program that lets you broadcast your already signed (offline) transaction to the blockchain network. So while hardware wallets technically “connect” to the internet, the physical device itself never connects to the internet, only the software.
Let’s break down what the transaction process looks like:
The user connects the physical device to the wallet’s interface on a computer or smartphone.
The interface is used to initiate a transaction
The user fills out the intent, or details of the transaction, within the interface.
The transaction is confirmed on the interface, and then the user signs the transaction off on the physical device with their private key. Some devices require a PIN before signing.
The device only sends the signed transaction to the software on your phone or laptop, not the private key.
The interface broadcasts the transaction through the blockchain to be validated.
This allows users to access DeFi services and apps while still maintaining the security that comes with cold wallets. Keep in mind, the wallet is not executing the smart contract, only authorizing it. The execution still takes place on the blockchain.
Hardware wallets use specially made operating systems and chips but can also vary wildly in price, utility, and security. Some wallets allow for signing transactions on hundreds, even thousands, of different cryptocurrencies. You can be limited in what crypto you utilize if your hardware wallet doesn’t support it.
Even if they have increased functionality, users should still treat hardware wallets like other types of cold wallets, using them for safer long term storage of larger assets.
You might be thinking hardware wallets provide complete anonymity, but that's not necessarily the case. Your transactions are still recorded on the blockchain after all, and if you buy crypto from an exchange that adheres to KYC practices, your identity could potentially be linked back to your wallet’s address and transaction history. That's assuming you don’t take extra precautions to protect your privacy.
To be sure, hardware wallets are much more secure than hot wallets, but come with the responsibility of maintaining and protecting your device and keys. They remain a useful form of cold storage for casino players with their interface, making transactions to hot wallets for depositing crypto on sites easier to perform.
I’ve already hinted at some of the benefits of using crypto wallets for online casinos, but I want to focus more on how they can enhance your experience as a player.
Blockchain technology has been a total game changer, namely because of how fast users can conduct transactions as opposed to traditional fiat banking methods. For casino users, headaches were all too common if deposits were international, sometimes taking full weeks to be credited to their account. Withdraws faced this issue too, and casinos are notoriously stingy when it comes to paying out, let alone on time. It was accepted that you had to be patient to get in on the action and be even more patient to get out.
Using crypto wallets makes it possible for transactions to be over in mere minutes or hours due to the speed of blockchain networks, allowing users to bypass the waiting game that's often associated with online casinos.
With crypto wallets, you have more control over your funds and how you face any potential risks. If you use both a hot wallet and a cold wallet, you can decide how much you spend separately through your hot wallet while maintaining your more secure storage with a cold wallet for savings - a great way to practice responsible gambling.
If you value having more security, you could just bypass the use of a hot or custodial wallet, a plus since custodial wallets can be subject to account seizures, KYC flags, withdrawal limits, and downtime of services. While you’ll still have to rely on exchanges to convert fiat into crypto, you lessen your dependence on exchanges should you choose to maintain a self-custodial wallet. Keep in mind that, depending on their operator’s gaming authority, casinos can potentially require AML/KYC checks for withdrawals. No wallet can automatically bypass that.
Compared to fiat banking, crypto wallets offer usage tailored to your specific needs as a player, and can be flexible should those needs change.
Since blockchain inherently records and audits transactions, crypto wallets help provide you with better record keeping on transactions between you and the casino, which can be useful in the event a dispute arises or customer support is needed.
All wallets provide important and useful information in these scenarios, including
The deposit address (where the player’s funds came from)
The Withdrawal address (where the casino sent player’s funds)
The TXID (the unique identifier recorded on the blockchain as proof)
The network used (transferring crypto means using the blockchain that allows it)
Should you need to contact customer support or settle a dispute, you’ll have this information available to share, which can help solve issues like delays in transactions. Be smart and keep a record of all of your transactions in one secure place. Information means nothing if you don’t have it.
Using financial assets for gambling is never risk free (which is why you should keep records of transactions). If you’re not careful, your experience can be ruined. Remember, if you use the wrong network to deposit funds, they are lost permanently and your account is never funded. Online casinos using crypto will provide a list of supported currencies and networks. Use that to your advantage and verify before you deposit any money.
The Terms of Service (TOS) is where a lot of players become blindsided by KYC verification for withdrawals. Some casinos advertise themselves as “No-KYC”, but if they are licensed, they will require identification after a threshold is met. The TOS can also say something different about withdrawal speeds and limits that are different from what they advertise. Bonus games are no exception, either. There’s a lot of great online casinos offering bonuses for deposits made with cryptocurrency, but the TOS will have the actual specific deposit and wagering requirements, which can be affected by the changing price (volatility) of a given currency. The TOS is exactly what customer support will reference in these scenarios, so read up on the site's documentation to understand exactly how crypto wallets are used and treated on their site.
Crypto wallets are your key (quite literally) into the larger world blockchain and, more importantly, a better online gaming experience. Faster transactions and control over funds are somethings fiat can’t really hold a candle to. While the most popular practice is to use both cold and hot wallets, it is totally up to you for accessing your funds as you see fit.
Be aware of the trade offs inherent between custodial, non-custodial, hot, cold, and hardware wallets. The type of wallet you use will affect how you store and manage your funds.
Should you prefer convenience and ease of use, custodial hot wallets are certainly a viable option, assuming your custodian allows the wallet to be used for gaming transactions. If you want a middle ground, there are plenty of options for non-custodial hot wallets, but you take on more responsibility for ensuring your keys are safely stored and protected from online attacks. On the other extreme, cold wallets (including hardware), provide a more secure and private experience for players, even if they are not as convenient to use as other options, due to actual management and storing of keys. These are all risk factors you should consider before you choose a wallet, purchase crypto, and transact to other wallets.
While we went over the types of wallets, there’s still more to learn. The next step is learning how to buy cryptocurrency safely as a beginner.
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