Bitcoin is independently storable without reliance on, or assistance from, any third-party such as a bank, financial institution or government. Instead, securing bitcoin relies upon unique cryptographic keys which can be kept independently and used for sending and receiving batches of bitcoin. These unique keys are managed and accessed through a bitcoin wallet. This wallet manages a shareable key (the public key) to which bitcoins are received, along with a confidential key (the private key) from which bitcoins are sent.

These keys work as a pair, similar to an account number and password. Just as transactions sent in the banking system are ‘locked’ to an account number and accessible with a password, transactions in bitcoin are locked to a public key and accessible with a private key. In an important distinction from the legacy financial system, where banks are needed to manage your accounts, in Bitcoin you may manage your own bitcoin wallets and you may be anonymous in doing so.

Today, Bitcoin infrastructure has evolved to the point where users rarely handle public keys and private keys themselves (they are large, inconvenient numbers). Instead, bitcoin wallets will typically provide a user with a ‘seed phrase’ that encodes the same information as private keys. A seed phrase is normally 12 to 24 common words randomly chosen from a bank of 2,048 words, making the phrases easier to remember and maintain.