Bitcoin wallets are an important function of the Bitcoin node; they contain private and/or public keys and Bitcoin addresses. There are various types of Bitcoin wallets and each one offers a varied level of security and functions, as required.
There is a common misconception that an e-wallet can contain Bitcoins but a Bitcoin wallet will only contain keys. Each Bitcoin is recorded on the blockchain in the Bitcoin network. A Bitcoin wallet contains keys, and these keys authorize the use of Bitcoins that are associated with the keys. Users or wallet owners sign a transaction with the keys in the wallet, proving that they own the Bitcoins. In reality, these Bitcoins are stored on the blockchain in the form of transaction outputs that are denoted as txout.