What is a Hosted Wallet?

A Hosted Wallet is a type of digital wallet where the keys are fully managed and hosted by a third-party provider. This means that the user does not have direct control over their private keys, nor do they have any responsibility for securing them. The service provider stores and secures the user’s funds on their servers and provides a range of features to help manage users’ accounts. These may include multi-signature transactions, biometric authentication, merchant payment options and more.

Hosted Wallets offer convenience, as users no longer need to set up an individual wallet or secure their funds themselves; this task is handled entirely by the service provider. They also provide added security in that the hosting platform can take measures such as data encryption and two-factor authentication. However, by relying on a third party to manage their funds, users are putting trust in the service provider and giving up control of their private keys. This is why it is important for users to ensure that they select a reputable Hosted Wallet service with strong security measures in place.

In conclusion, Hosted Wallets offer convenience and some additional security measures compared to self-hosting your own wallet; however, it is important for users to understand the potential risks associated with trusting a third-party provider with their funds. As always, do thorough research before selecting a service provider so you can make an informed decision about which one best fits your needs.

Simplified Example

Hosted wallets can be thought of like a piggy bank that is kept at a bank. Just like how you keep your allowance money in your piggy bank at home, you keep your digital money (like Bitcoin) in a hosted wallet on the internet. The bank takes care of your piggy bank and makes sure it is safe from theft or loss. Similarly, the hosting service takes care of your hosted wallet and makes sure it is protected from hackers or other security threats. This way, you don't have to worry about losing your digital money, just like how you don't have to worry about losing your allowance money in your piggy bank at the bank.

History of the Term "Hosted Wallet"

The term "hosted wallet" is thought to have come into use in the early 2010s, aligning with the evolution of cryptocurrency and the increasing demand for secure digital asset storage. It denotes a specific type of cryptocurrency wallet in which the crucial private keys, necessary for accessing and managing cryptocurrency funds, are stored and overseen by a third-party service provider.


Coinbase: Coinbase is one of the most popular hosted wallets, offering a secure platform for users to buy, sell, and store their cryptocurrencies. With Coinbase, users can easily link their bank accounts, credit cards, and debit cards to buy and sell cryptocurrencies in a few clicks. The wallet also offers a variety of features such as recurring buys, portfolio management, price alerts, and more.

Exodus: Exodus is another popular hosted wallet that supports multiple cryptocurrencies including Bitcoin, Ethereum, and more. The wallet has a user-friendly interface, making it easy for users to manage their cryptocurrency assets. Exodus also offers integration with hardware wallets like Trezor, offering users added security for their funds. Additionally, Exodus also provides a built-in exchange feature, allowing users to quickly and easily exchange one cryptocurrency for another within the wallet.

MyEtherWallet: MyEtherWallet (MEW) is a hosted wallet specifically designed for the Ethereum network and its associated tokens. MEW offers users full control over their private keys, allowing them to manage their own funds. The wallet also offers integration with hardware wallets like Trezor, providing added security for users' funds. Additionally, MEW provides a range of features, including the ability to view and manage smart contracts, as well as view detailed information on Ethereum-based tokens and their transactions.

  • Private Key/Secret Key: A unique, secret code that is used to secure and access a cryptocurrency wallet.

  • Multi-Signature: A type of digital signature that requires more than one signature to be valid.