If you hold a lot of crypto, this type of wallet can be more secure as there’s no third-party custodian involved that might compromise account security. In other words, only you hold the private keys, which means you’re the only one with access to the wallet. Unlike custodial wallets, non-custodial wallets give you complete control of your private keys. Similar to a bank card PIN, your private key is a unique alphanumeric password that allows you to “spend” or send cryptocurrency out of your wallet. In this case, the exchange holds your private keys and is responsible for securing the funds in your wallet. For example, when you set up a crypto exchange account, your wallet is under the custody of that particular platform. Like traditional bank accounts, custodial crypto wallets are under the care of a central authority. While many beginners use custodial wallets to start, you can also opt to use a non-custodial wallet, depending on the level of security you prefer. Custodial vs non-custodial walletsĭeciding whether to use a custodial or non-custodial crypto wallet is the first choice you’ll need to make as a new crypto holder.
In this post, we break down these security considerations in relation to crypto wallet custody and type. However, regardless of individual circumstances, security should always guide crypto wallet selection. If you’re looking to purchase cryptocurrency, you’ll need to set up a crypto wallet first but what is the best crypto wallet for beginners? In short, the answer will be different for each person.
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