How Wallets work

There is a common misconception on how crypto-currency wallets work. Your ‘coins’ are not actually held on the device the wallet software is downloaded to. The wallet is simply a piece of software that gives you a visual representation of the coins you control.

The record of the amount is held on the blockchain itself and the wallet scans the blockchain to find all transactions associated with your keys (seed phrase).

When you login to your wallet it scans the blockchain to update all of your transactions and display them in the wallet interface. As you can see from the image above the coins (represented by the Haven logos) are not actually held in the wallet but as records on the blockchain.

Because this record is held and agreed on by many 1000’s of computers all over the world it becomes extremely difficult for anyone to alter it. This is partly what gives blockchain technology its high level of security.

IMPORTANT: Your seed phrase of 25 words is the most important piece of information to remember and protect as this combination (set of keys) tells the blockchain where to look for your coins on the blockchain and once ‘found’ allows the user to send those coins to another address.