With non-custodial wallets, you have full control over your private keys.

Custodial wallets focus on user-friendliness but require you to give up some control.

Non-custodial wallets offer maximum autonomy and privacy but require more responsibility.

📍What is a Custodial Wallet?

A custodial wallet is a wallet where a third party, often a crypto exchange or broker, manages the private keys for you. You don’t have to worry about securely storing your seed phrase or making backups. You simply create an account on a platform and can immediately start buying, sending, or receiving crypto.

📍How Does a Custodial Wallet Work?

When you create an account with an exchange or broker, a wallet is automatically created for you. Usually, you don’t receive a seed phrase or private key. Instead, you log in with a username and password. Often, you can set up extra security layers like two-factor authentication (2FA). If you lose your login details, you can usually request them again easily via your email.

📍What is a Non-Custodial Wallet?

A non-custodial wallet, also called a self-custodial wallet, is a wallet where users have full control over their private keys. No one else has access to your crypto unless you give them your private keys. Non-custodial wallets come in the form of hot wallets and cold wallets. A non-custodial hot wallet often takes the form of a mobile app or software wallet. A non-custodial cold wallet exists as a hardware wallet or paper wallets. Well-known brands of hardware wallets include Ledger and Trezor, which often look like a USB stick.

📍How Does a Non-Custodial Wallet Work?

When you create a non-custodial wallet, for example via a mobile app like Trust Wallet or a hardware wallet like Ledger, you gain full control over your cryptocurrencies. You don’t log in through a third party; you manage everything yourself.