To convert cryptocurrency, users need a particular wallet. It doesn’t matter if you transfer one token to another, want to withdraw cash, or want to store assets. Choosing the proper storage is confusing for all users, especially at the beginning of the journey.
Traders often require help deciding between non-custodial vs custodial wallet. Each of them has its characteristics and advantages. Let’s figure out the key differences between these vaults and try to decide the best option for your cryptocurrency.
Features of Custodial Wallet
Custodial crypto wallets — a type of storage in which a third party stores the key to assets. This person assumes obligations in the safe storage of funds, and permits to make transactions. These are wallets from exchangers and cryptocurrency exchanges.
The main advantages of this option are:
- ease of use;
- the ability to quickly recover your password;
- less responsibility for users.
But it would help if you understood that custodial wallets are not guaranteed 100% safe for your savings. If you have delved into how to cash out cryptocurrency, you know you do not need to store all assets in one place. Keeping only the amount you will work with is better in a custodial wallet.
But there is a plus: you do not need to constantly think about how to cash out cryptocurrency. You just need to go to the site, specify your login and password, and convert cryptocurrency.
Non-Custodial Cryptocurrency Wallet
In a non-custodial crypto wallet, all asset storage responsibility depends only on the owner. That is, only you are the owner of the assets, and no one else has access to them. The main advantages of such storage:
- huge selection of wallets;
- complete security assurance;
- there are options with a massive number of functions;
- loss of funds in case of hacking is excluded.
There are hot and cold non-custodial wallets. The first option includes various programs and extensions for computers and mobile phones. They are constantly connected to the Internet, which allows you to update the program and conduct a financial transaction quickly. A wallet can only be used for assets of the same type. Those who operate with different cryptocurrencies should pay attention to universal options.
A cold wallet is a special card or flash drive containing your cryptocurrency’s keys. They are stored separately, which excludes even minimal hacking attempts. This option is ideal for users who have invested in cryptocurrency for a long time.
