A wallet is a software to manage and pay with your cryptocurrencies, which means it is basically a digital purse . The difference is that a wallet does not contain tokens or coins of any currency directly, but the digital private and public key pair and a collection of addresses. Users can thus view their own stock of the respective cryptocurrency and digitally sign and execute transactions. The coins themselves (like Bitcoins or Ether) are not stored in the wallet, they are stored on the Blockchain .
A wallet is not a centralized account, it is possible to access the wallet with the private key via any internet-accessible device . Since the private key is the only key to your own cryptocurrencies, it is very important to keep it safe .
When designing a wallet, it is important to find the right balance between practicality and data protection. If only one private key is used to encrypt transactions it would be practical. But for data protection it would be more advantageous, if a new private key is used for each new transaction.
There are two different types of wallets. In the nondeterministic wallet, the private keys are all randomly generated and there is no connection between them. In contrast, the private keys in the deterministic wallet are all derived from a master key (so-called seed) and are therefore related to each other .
 Heines, R. (2017): Blockchain Technology Applications: A Conceptual Framework from a Supply Chain Perspective
 Antonopoulos, A. (2015): Mastering Bitcoin Unlocking Digital Cryptocurrencies
 Swan, Melanie (2015): Blockchain Blueprint for a new economy