What Are Custodial & Non-Custodial #Crypto Wallets?
Which one is the best for you?
Let's find out in this short Twitter 🧵
#Bitcoin #Ethereum
1/🧵 The custodial wallet is a service where the service provider manages the private keys of your funds.
For ex: #Coinbase Exchange Wallet is a custodial wallet. Company owns the keys to your funds while you have a login id and password for your account to access those.
2/🧵 Custodial Wallet PROS:
- Convenient
- User Friendly
- Trader Friendly
- Customer Support
- Account Recovery
CONS:
- Not Your Keys, Not You Crypto
- KYC
- No Offline Access
- Prone To Hacking
- Prone To Data Breach
- Prone To Bankruptcy. LOL @ Coinbase!
3/🧵 All exchange wallets are custodial wallets. Exchanges may provide different services, perks, security levels & insurance for retail/institutional investors.
With custodial wallets, Users are at risk of losing access to their holdings if..
.. the company providing the service ever went bankrupt or hacked or burned, you are fucked!
Recently @coinbase sparked some controversy over this disclosure that was included in the company's first-quarter earnings report.
Coinbase CEO @brian_armstrong went ahead and explained why customers are protected in case of a 'black swan' event like 'bankruptcy' which is highly unlikely according to him.
He said this when the quarterly earnings are at $430m LOSS!
twitter.com/brian_armstrong/status/1524233480040710144
4/ 🧵 Non-Custodial Wallet or Self-Custody Wallet gives the power in the hands of its users. You are responsible for your own keys and security.
For ex: Metamask & cold wallets like Ledger. They let you interact with BC to access funds with your password & seedphrase!
5/🧵 Non-Custodial Wallet PROS:
- Self Custody
- More Security
- Full Control Over Funds
- No CEX Fees
- Can Access Offline
- No KYC
CONS:
- Technical
- More Responsibility
- Lose Your Keys, Lose Your Funds
- No Support
- Bad UX/UI
6/🧵 Which one is better?
It all comes down to security! Most peeps in crypto use them both in combo
- Custodial Wallets: If you are a trader or a complete newbie with little to no experience of crypto.
- Non-Custodial Wallets: If you want more security to protect your wealth.
7/🧵 If you want maximum security then go for cold wallets like @ledger or @trezor
Your hardware wallet guide by the #DeFi OG @thedefiedge: mobile.twitter.com/thedefiedge/status/1504127642106150925
8/🧵Hot vs Cold Wallet
leofinance.io/@finguru/hot-wallet-vs-cold-wallet-which-one-is-better-and-why
-- The End --
If you want to read the blog version of this 🧵, please check it out on Web3 Social Media @FinanceLeo:
leofinance.io/@finguru/custodial-vs-non-custodial-crypto-wallets
#HIVE #CustodialWallet