Custodial VS Non-custodial: How the two wallets stack up against each other?

Crypto-currency is the process that helps us in dealing with the online platform with one of its assured security through cryptography.

Cryptography is one of the best encryption techniques that is used as assured security to deal with your transactions.

Later when the development in the crypto-currency was made, then eventually to make it more advance the use of Bitcoin in this technique has evolved more since then. Bitcoin is basically a type of currency which is used during crypto-currency with a certain value for each coin. But they are from a decentralized authority that means no government agencies will take any responsibility to whatever deals you made through Bitcoins.

It is still not accepted as the legal mode of transactions anywhere. Here the mode of a commodity cannot be accepted by all. Only those who know how to deal with bitcoins they just try to initiate this process.

They are basically balances or you can say the coins that are generally being kept in the cloud of any user. They don’t have any physical appearance. The software development services help in the improvement of this process regularly and also ensure their users to have a better portal with secured features and improved algorithms. They are basically created with the help of a mathematical encryption algorithm.

Use of cryptocurrency

Before in this crypto-currency network, the use of it was not so systematic. There were no records being made of the transactions that were made by the users. As it is a decentralized system already the trust-building issues were not so appropriate.

As the banks who are the centralized system, they have a basic systematic format to keep a record of every transaction being made in the online dealings. But slowly it has been evolved in the bitcoin app development format also. They started to keep a record of the ledger and the miners they do keep a check of the transactions that are made across the bitcoin network. Bitcoin application development has really evolved. It has made many changes in the coming years to make the mode of transaction easier.

This is a systematic format to avoid consequences like one user is paying to another party and that record of the transaction is not recorded and the user is required to pay again, keeping records must be the main purpose of the facility.

What is block-chain?

The working of a block-chain is a simple and systematic arrangement of occurrences. It is basically a system that is used for online purposes to store data in bulk amount and also in a serial format. Today’s best android development company helps in creating an app with suitable features.

In this case of crypto-currency, what happens is that the number of transactions made anywhere or say worldwide the block-chain helps in recording all the details of the transactions made which can be used anytime even for future purposes. The use of bitcoin is like it consists of wallet development services who takes care of the transactions made and the coin achieved that is being kept in the wallet for future use. The more the number of transactions the more is the ledger information and that simultaneously increases the number of blocks which record the data meanwhile. Blockchain app development services help in generating an app with the help of a blockchain app development company that creates a chain of blocks to make their storage capacity better.

Now, all this process requires a wallet that helps in keeping the balance.

Custodial wallets

As we all know these days all the major online apps and deals can be done with the wallet balance also, this is not actually the leather wallet that you carry with you it is basically online storage where you can store your digital cash for further usage. The custom mobile application development helps in creating apps with customized features.

Custodial wallets are also a wallet that has some cash through which you can make certain transactions like receive cash or send payments. But the private key, in this case, is in the hands of the third party. That simply means you cannot make your transaction possible without the involvement of the third party who is acquiring the private key.

This simply means that you need to inform them before any deal that you need to transfer or receive cash before themselves.

Certain examples that use custodial wallets:

  • Free-wallet
  • Coin-base
  • Binance
  • BitMex


  • The transactions are free here: When you are using the custodial wallet then you do not have to pay for the transaction fee. One of the best examples of this situation is Free-wallet.

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  • No major effect if the private key is lost: As you already know that here one of the private keys is with the third party and one with you. So the third party they keep your private key really safe and secured. But if you yourself lost the private key somewhere or even sometimes there are people who forget the mnemonic phrase, it is still not a big deal because you can still get access to your account and funds.
  • Higher backup possibility: The use of the custodial wallets leads you to another very important advantage. The wallets used here are generally managed by the central authority who helps or provides a very significant service to the back-up possibility in your wallet. This is really helpful when you want to stop or cancel any transaction and also during the restoration of the previous version.


  • The third-party controls over your money: What happens here is the custodial crypto-currency services are having one of the biggest disadvantages that our stored amount is actually controlled by a third party and not mainly by us. They have complete control over our account and if they want they can also freeze the stored amount. 
  • Requirements for KYC: It has another big disadvantage of using this wallet that the customers to get access to their account they always need to go through the KYC (Know your customer, verification policy) part of verification.
  • No-offline facility: The using of the custodial wallets is not that easy because you always need to have a connection with the internet to make all the required transactions.

Non- custodial

This type of wallet lets you take control over your funds and also along with the private key. This helps you to be your bank and also make your transactions without the involvement of any third party.

Certain example that uses the non-custodial wallet:

  • Electrum
  • Exodus
  • Ledger Nano X
  • TREZOR One