5 Must-Know Differences Between Custodial Wallets and Non-Custodial Wallets

From the inception of investing in cryptocurrency, the biggest thing that concerns the most is choosing a crypto wallet. Finding out which type of crypto wallet would be a good fit for your needs is a big task. 

As so many issues appear when it comes to choosing between custodial wallets and non custodial wallets. Some say custodial is the best crypto wallet, while others say non custodial wallets are good. 

So, in the race of custodial vs non custodial wallets, which one is suitable for your requirements? Whether coinbase non custodial wallet is good or not? What are the coinbase wallet benefits? Well, it is a matter of deep concern that requires a lot of thinking. 

But to help you out of this dilemma, this post has brought you all the differences between two crypto wallets. All you need is to understand what is the difference between non custodial wallets and custodial wallets.

Custodial Vs Non Custodial Wallets: A Close Examination 

Based on several factors, here is a close analysis of which crypto wallet is good for investing in cryptocurrency. Once you go through it, you will no longer wonder which type of crypto wallet is good for you. Read along!

Private Key

In custodial wallets, the ownership of your account stays with the wallet provider. It means this type of wallet comes with third-party ownership. You can’t buy and sell crypto without third-party involvement. 

The ownership of your wallet is in your hand if you have a non custodial wallet. You don’t rely on any third-party wallet providers. Moreover, to use non custodial wallets, you must know how the cryptocurrency market works. 

Security

Third-party handles custodial wallets, and when it comes to security, you can’t rely on them. As per the history of custodial wallets, there have been several instances where people have been conned. The security standard of custodial wallets is low comparatively. 

Non custodial wallets provide strong security, and if you forget the private key, you still have the recovery key to regain your account. But in case you don’t have a recovery phrase, you can’t get access to your own non-custodial wallet. 

Accessibility

When it comes to accessing a wallet, custodial wallets are accessible only by registered accounts. You must have registered and have an account to use your custodial wallet. 

Unlike custodial wallets, non custodial wallets are available to use by anyone. But you must have a good knowledge and understanding of the crypto market. 

Support

Custodial platforms are easy to use as the third party helps you thoroughly. And you get complete support for managing your crypto wallet. To start any transaction, you will always have assistance from the wallet service providers. This way, you don’t find any problem with your account handling. 

Non custodial wallets have an issue with getting support. Since ownership is in your hands and you can’t share the private key with anyone, you must know how to handle an issue. So, getting support for your non-custodial wallet is slightly difficult. 

Transaction Costs

The custodial wallets offer a higher transaction cost. In addition, the transactions are evident with third-party involvement; there will be charges. And such charges cut a lot of money on every transaction the user makes through the custodial wallet. 

The non-custodial transaction is completed in the owner’s hand, so there are no additional charges. However, a transition fee applies to every exchange that happens. 

KYC Requirements

Custodial wallets come with KYC for every transaction you make through your crypto wallet. Sometimes, completing the KYC step to access your account becomes tiresome. Moreover, for every cryptocurrency enhancement through your wallet, you need to undergo the KYC process. 

Since only the user has access to the cryptocurrency, non-custodial wallets are exempt from KYC regulations. This implies that any criminal activity involving cryptocurrency is entirely the user’s fault. Therefore, you must go through the KYC procedure if you use a custodial wallet.

Final Takeaways!

Though there is a tussle between custodial and non custodial wallets, both have benefits and limitations. The above comparison, non custodial vs custodial wallets will help you to pick the right crypto wallet per your needs. So, the first thing you need to do is evaluate your knowledge of cryptocurrency. This way, you can identify your needs and make a better decision. 

However, you can contact cryptocurrency experts to get assistance. The technical experts who work on the latest technology like blockchain and cryptocurrency can help you to use crypto wallets. Thus, get in touch with them and enjoy investing in cryptocurrency. 

 

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