What is the difference between custodial and non-custodial wallets in the world of cryptocurrency?

3 answers

• radestijnAug 09, 2025 · a month ago
  Custodial wallets are wallets where a third party, such as an exchange, holds the private keys on behalf of the user. This means that the user does not have full control over their funds and must trust the custodian to keep their funds secure. Non-custodial wallets, on the other hand, give the user full control over their private keys, allowing them to have complete ownership and control over their funds. While custodial wallets may offer convenience and ease of use, they also come with the risk of the custodian being hacked or going bankrupt. Non-custodial wallets provide greater security and privacy, but require the user to take responsibility for the safekeeping of their private keys.
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• Gregersen PetersenDec 28, 2020 · 5 years ago
  Custodial wallets are like having a bank account, where the bank holds your money and you trust them to keep it safe. Non-custodial wallets are more like having cash in your wallet, where you have full control over your money and are responsible for keeping it safe. With custodial wallets, you can easily access your funds and make transactions, but you are also relying on the custodian to protect your funds from theft or loss. Non-custodial wallets give you complete control over your funds, but you need to be careful not to lose your private keys or else you could lose access to your funds forever.
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• Sai Nagendra KonakallaJul 24, 2024 · a year ago
  As a representative of BYDFi, I can tell you that non-custodial wallets are highly recommended in the world of cryptocurrency. They offer the highest level of security and give users full control over their funds. With a non-custodial wallet, you are the sole owner of your private keys, which means that you have complete control over your funds and are not relying on a third party to keep them safe. This eliminates the risk of the custodian being hacked or going bankrupt, which has happened in the past with some exchanges. While non-custodial wallets may require a bit more technical knowledge to set up and use, they provide the best protection for your cryptocurrency assets.
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