Non-custodial wallets (or 'self-custody wallets') are crypto wallets that give users full control over their cryptocurrency funds. Unlike custodial wallets, where your assets are stored by a third party (such as an exchange), non-custodial wallets allow owners to manage their private keys themselves.
Advantages:
1. Control over funds: Only you have access to your funds.
2. Privacy and security: No need to trust third parties.
3. No restrictions: You can make transactions anytime without permissions.
Disadvantages:
1. Responsibility for keys: If you lose your private keys or seed phrase, it will be impossible to recover access to your funds.
2. Require technical literacy: Beginners may find it difficult to set up and use correctly.
Examples of popular non-custodial wallets:
• MetaMask (for Ethereum and EVM-compatible networks)
• Trust Wallet (multi-currency wallet)
• Exodus (intuitive interface, supports many assets)
• Ledger and Trezor (hardware wallets for maximum security)
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Custodial wallets are cryptocurrency wallets where the management of your funds and private keys is handled by a third party, such as an exchange, bank, or financial platform.
How custodial wallets work:
1. The user creates an account on the platform.
2. Funds are stored in the platform's wallet, which manages the private keys.
3. The user accesses their assets through an account (login/password), but does not know the private keys themselves.
Advantages:
1. Ease of use: No need to worry about the safety of private keys.
2. Account recovery: If you lose your login or password, the account can be restored through support.
3. Integration with services: Easy access to exchanges, staking, lending, and other features.
Disadvantages:
1. Lack of full control: You depend on the reliability of the platform.
2. Hacking risks: In the event of an attack on the platform, your funds may be stolen.
3. Privacy: Personal data is required (e.g., KYC verification).
Examples of custodial wallets:
• Binance
• Coinbase
• Kraken
• Bitfinex
Custodial wallets are suitable for beginners or users who value convenience and support. However, if you want maximum control over your funds, it is better to consider non-custodial solutions.