Wallet
Not a purse, but a key
What is it?
The word misleads. Nothing lies inside a wallet the way notes lie inside a purse.
The assets are recorded in the blockchain ledger, under an address. The wallet holds only the private key to that address. It is the proof that you are entitled to dispose of them.
Closer than a purse is the comparison with a key to a safe deposit box whose contents everyone can see. Everybody knows what is inside. Only the keyholder can reach it.
An example
Someone who forgets their password at a bank proves who they are and gets a new one. The account is still theirs; the bank keeps it.
Someone who loses their private key loses access for good. Nobody reissues it - the assets stay visible forever at an address nobody can reach again.
The reverse holds too: anyone who obtains someone else’s key is indistinguishable from them as far as the blockchain is concerned.
Where does a risk come from?
| Loss | Key gone, assets gone. No recovery path, no exception. |
|---|---|
| Theft | Whoever obtains the key can move everything - and the blockchain sees no difference from the owner. |
| Deception | The most common case. The key is not stolen; its holder is led to use it themselves - for something other than what they believe. |
The third case is the most awkward, because technically everything runs correctly. The key is safe, the signature is valid, the entry is right. The only thing wrong was what it was given for.
Why this matters for cover
Because the line between “something was taken from me” and “I handed it over myself” runs here - and that exact line appears in every wording.
Cover products typically cover flaws in programs or attacks on protocols. Loss of a key, or deception of its holder, is often expressly excluded, because it does not arise in the protocol but with the person.
Anyone assessing a cover should look for that line in the wording first.
Where this leads
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What you actually do with the key - and the four things that get confused.
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Holding it yourself or having it held: two routes, two risks.