Custodial Vs. Non-Custodial Wallets: Which One Should You Use?

    There’s no right or wrong when choosing either a custodial wallet or a non-custodial one! Each option comes with its own pros and cons. 

    First of all, a crypto wallet is a device, program, or software that stores the private keys for all your cryptocurrency and transactions. So, which one should you go for? 

    Evidently, it all comes down to your personal preference for securing your crypto wallet from phishing attacks and scams. 

    Let’s break down the difference!

    Wallet draining dark side of web3

    What is a Custodial (Hosted) Wallet?

    As the name suggests, a third party called a ‘custodian’ controls your funds. And there are A LOT of them like Coinbase, Binance, and KuCoin. 

    Basically, when you use a custodial wallet, someone else creates, maintains, and has access to your account and private keys.

    As a beginner, this might seem like the easiest way to get into the cryptocurrency game without worrying about remembering your keys.

    When opting for this wallet instead of a non-custodial one, make sure you choose a reliable company that offers high-tech level security and insurance coverage!


    • User-friendly interactive interface.
    • Easy password/private key recovery.
    • They support a lot of currencies.
    • Some of these wallets have currency exchanges built into them.


    • Reduces user anonymity.
    • Complicated process & ‘know your customer’ (KYC) procedures to create an account.
    • More vulnerable to hacks, scams, and cyberattacks since they’re connected to the internet. 

    What is a Non-Custodial Wallet?

    A non-custodial wallet guarantees that you have total control over your funds without a need for a third party. These can be hardware wallets like Ledger or software wallets like Metamask, Atomic Wallet, and Exodus. 

    Note that you have to be extremely responsible using non-custodial wallets because only you can keep your keys and your wallet secure. If by any chance you lose your wallet or forget your private keys, you could lose access to all your funds!

    If the idea of someone having access to your private keys doesn’t sit well with you, then you should opt for non-custodial wallets!


    • Only the user has control over funds and keys.
    • Not connected to the internet, so they are more secure from cyber threats and hacks.


    • Impossible to recover funds after losing private keys or recovery phrases. 
    • Not very user-friendly as they require a lot of technical know-how. 

    Types of Wallets

    The Verdict

    Both custodial and non-custodial wallets are good to store your crypto assets as well as your NFTs. And it’s worth mentioning that most crypto-savvy investors prefer to use both types in junction!

    Do your own research, assess your need, and weigh out the pros and cons of each wallet choice before deciding which one to go for. Stay tuned for more, and may the odds be in your favor!


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