Crypto Wallets: Custodial vs. Non-Custodial and Their Pros and Cons

Recently, we have actually witnessed a massive rise of the cryptocurrency and it has helped to bring out the need for more use of the crypto wallets that needs to be used. Like many of us is aware of, the crypto wallet is always used to help us keep and manage your digital assets majorly in form of cryptocurrency.

When we are talking about crypto wallet, we need to understand that it comes in two from which I will be explaining today. The first one is the custodial and the non custodial as each of them have their own features attached and peculiar to them all. As a crypto user that is trying to explore the crypto space, I believe it is necessary for you to understand the difference between both as that will help you to make the decision on which Waller to go for.

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Talking about the crypto wallet first even before talking about the differences that exist between both of them. I will say majorly the crypto wallet is not the one that store the digital asset but just store the keys that will give you access to those digital assets. When it comes to the crypto wallet, we have both the public keys and the private keys just as we have also on Steemit.

Now let me briefly talk about custodial wallets. They are actually the type of crypto wallet that is majorly controlled by the centralised exchange who keeps you store your keys. In this sense, the user do not generally have the. Control on their funds as they share the control with the custodian which at times can be the centralised exchange which helps them to store the private keys.

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Of course, there are a lot of benefits that lies in the custodial wallets and the side effect of it. The first advantage is the fact that it helps to provide ease of use. Most of the time, custodial wallets is designed in a way that it has easy and friendly interface with the user can easily relate with. Not even only that but also the fact that it have an edge over the non custodial wallets when it comes to account recovery. Like I said earlier, since it is centralised exchange based, it is easy for you to recover your account if lost through other means of account recovery.

Of course there are other side effect of the custodial wallets which I see it as a disadvantage. The first one I will like to talk about is the fact that the user did not have full control over their digital assets as it involves centralised exchange or centralised authority. One major disadvantage I can also talk about when it comes to custodial wallets is the fact that it is prone to hacks and data breaches most of the time as compared to the non custodial wallets. In the recent years, there have been more hacks and data breaches when it comes to custodial wallets as compared to the non custodial wallets.

Before I round up, I will like to talk about the Non custodial Wallets. When I talk about the non custodial wallets, I will say it deals with having full control over your private keys much more than custodial wallets. You have the full control and ownership because you actually hold your private keys. In this aspect, there is no third party that is involved in this and which is a massive edge as compared to the custodial wallets.

But of course with that, it has side effect and one of the major side effects is the fact that the user is responsible for the security of your private keys. Not only that, it is always difficult for you to recover your keys when it is lost making it difficult to carry out account recovery when it comes to non custodial wallets. Not only that, most of the time, non custodial wallets are always complex to understand as opposed to the user friendly design of the custodial wallets.