There are tons of apps and platforms that can provide you with a crypto wallet out there. And the discussions about what type of wallet “сustodial vs non-custodial wallet” do you really need are still raging across the crypto community and beyond.
The obvious difference between custodial (controlled by a third-party) and noncustodial (only you have control over it) is as simple as that. But when it comes to more profound differences within the cryptocurrency ecosystem, the wrong choice may cost you money. Let’s take a closer look at сustodial versus non-custodial debate.
Decentralization and responsibility
Non-custodial wallet is a decentralized wallet app/platform that gives you 100% control over your crypto funds. As a user, you will get your private keys and will have to come up with a mnemonic phrase (a word sequence used to access a wallet) with which you will be able to restore access to your funds.
Using a non-custodial wallet means that only you will have access to your private keys and, therefore, your money, but that comes with a price – only you will be responsible for it. If for some reason, you will lose your keys and forget your “phrase” – you can kiss your money goodbye! A custodial wallet is a whole other story.
Service to back you up
A custodial wallet is probably the most convenient way to store your cryptocurrency. You can access your funds from anywhere in the world. This service will back up your private keys, and you will be able to restore access to your wallet like with any other online service. Except for storage, there are, of course, other important features like brokerage and exchange for your digital currency.
But users who decide to store their digital coins on a third party service need to understand that they are not 100% in control of their funds and their money may be vulnerable to hackers. If you are still not sure which one “really takes the prize” in the battle of сustodial versus non-custodial wallet, you should figure out what your actual needs are, and then everything will fall into place.
The bottom line is – you’ve got only two choices. If you are a control freak and want a complete control of your money, you should probably use a non-custodial wallet (especially if you have a substantial amount of digital coins), but if you need a wallet for an everyday use and you want quick and easy service – custodial wallet is a way to go.