Along with the development of the internet and technology in the financial and banking sectors, we are gradually accessing and using the most advanced technologies in the financial sector, especially payment systems. Do not use cash. With the internet banking system, applications running on the iOS or Android platforms, users can perform online transactions. Online payment services all use cryptocurrencies to transact, making cryptocurrencies increasingly popular.

In short, a cryptocurrency wallet is a tool that you can use to interact with the blockchain network. You can use it to send and receive cryptocurrency or access decentralized applications (Dapps).

And once you have purchased crypto, you should decide and definitely choose which wallet, supervised or unattended, to store your coins.

What is a custodial wallet?

A custody wallet is defined as a wallet in which private keys are held by a third party. That is, the third party has full control over your funds while you only have to give permission to send or receive payments.

Custodial wallets have certain benefits, such as less user responsibility associated with private key management. The individual user is not responsible for protecting the private key for the wallet and therefore trusts the business that keeps the private key safe.

As can be seen in the early days of Bitcoin, all users had to create and manage their own wallets and private keys. Although it offers a lot of benefits, it can pose risks for less experienced users. If your private key is compromised or lost, you will permanently lose access to your crypto assets.

Custodial Wallets (Wallets you don’t keep private keys in)

Binance
Houbi
Bitmoon
Coinbase

Custodial wallet’s pros and cons

The main disadvantage of custodial wallets is that you have to trust your funds and private keys to a third party. In most cases, these service providers will also require identity verification (KYC).

However, the advantages of a custodial wallet are peace of mind and convenience. You won’t have to worry about losing your private key, and you can contact customer support when you have a problem.

What is a non-custodial crypto wallet?

It is a type of blockchain wallet that allows you to become your own bank. This implies that users have full control over their funds and over the associated private key.

Purposes

A non-custodial wallet for storing crypto assets on different blockchains. Depending on the application, you can trade coins directly and manage assets in different wallet applications.

Non-custodial wallets also help you access and use services and features of decentralized financial applications (Defi). something that a custodial wallet does not allow you to do. To transfer coins or receive coins to a non-custodial wallet, you will not need to pay a fee to the developer of the non-custodial wallet application.

To create or restore a non-custodial wallet, you need to use a key. There are 2 types of keys to note:

Passphrase (Mnemonic Seed): A sequence of 12 to 24 English keywords.
A private key is a string of characters in alphanumeric format that is also stored on your device.

Popular non-custodial wallets

You can consult and use some popular non-custodial wallets such as Coin98 Wallet (mobile version, extension, Web), Metamask, Trust Wallet, Zapper, Zerion,… Among them, the Coin98 Wallet is currently available. loved and used by many users.

If you want to participate in the DeFi world, experience trading on DEXs or AMMs, or simply speculate on DeFi tokens, which are not yet listed on exchanges, then a non-custodial wallet is an important factor. Elements always appear in those experiences.

There is a difference between a custodial and a non-custodial wallet

Private key supervisor

The most important factor to consider when comparing custodial and non-custodial wallets is who holds the private key.

In the case of a custodial wallet, a third party manages the private key. Meanwhile, in the case of non-custodial wallets, all blockchain management services are in the hands of the users.

Security

In the case of custodial wallets, all sensitive user data is stored in hot and cold storage. This data is often attacked by intruders. Therefore, the level of security is low in custody, unless the competent party implements strong security measures.

Meanwhile, in the case of a non-custodial crypto wallet comparison, all information remains with the user. This reduces the risk of data being stolen, unless the user shares details with someone or their device is stolen.

Backup and restore capabilities

Custodian wallets keep private keys to themselves. So, even if you lose access to your data, you can regain access by requesting a third party.

However, this is not possible in the case of a non-custodial wallet, as you are the sole authority.

Offline accessibility

To access your funding and corresponding details, you must log in to your supervisor wallet and make a request to the centralized regulator. This makes it mandatory to have an internet connection.

However, there is no such requirement for non-custodial wallets. In turn, this shows that a non-custodial wallet is a better choice to enjoy blockchain development services.

Future scope

Following crypto market trends, non-custodial wallets will continue to have an edge as data breach cases increase and users become more conscious of their privacy and data security.

What type of casting wallet should I use?

Most crypto users use both, but choosing which wallet to use depends on your needs.

If you want to have full control over your assets or simply want to use blockchain technology to interact with Defi applications, you should consider a non-custodial wallet.

If you are looking for a service provider that can fulfill your storage needs while you trade or invest, you can look for reliable custodial wallet service providers.

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