Non custodial wallet vs custodial wallet. Crypto users get different choices for storing their cryptocurrencies by selecting between these wallets. Moreover, the digital platforms of both kinds of wallets are making more profits due to the sudden increase in crypto investors worldwide.
Many entrepreneurs and investors are interested in making their crypto platform through blockchain development. But, it becomes hard for them to select between custodial wallets or non-custodial wallets development.
After knowing the difference between these wallets, entrepreneurs can easily select between them and decide which kind of crypto wallet development will be more suitable for their business.
A crypto wallet is a hardware device, software, or online service that helps users store their cryptocurrencies. Each wallet has its unique keys.
Keys contain the information of wallet address and password for sending and receiving funds within cryptocurrencies. The keys come in two types: the public and private keys.
There are two types of keys in crypto wallets, i.e., public and private keys.
Public keys allow crypto wallets to receive cryptocurrency transactions. You can think of public keys as a mail address that can be shared with anyone for receiving funds in your crypto wallet.
While private keys are similar to passwords, private keys create digital signatures without revealing your private keys. Private keys show the ownership of specific blockchain addresses during crypto transactions. The owner keeps the private keys in hardware like mobiles, pcs, hard wallets, etc.
If anyone lost their crypto wallet’s private keys, they would lose all their crypto holding stored in that wallet. Without the private keys, the owner would not be able to access the wallet for spending, withdrawing, or transferring the crypto coins.
Centralized third-party services provide custodial wallets. The wallet’s service providers hold the private keys of each user.
Knowing the advantages of centralized wallets gives the reason for opening crypto wallets on custodial platforms. Let’s discuss them in detail.
It can be the top of the plus point users can enjoy during crypto transactions. Users can enjoy. Also, know how Freewallet helps its users save around $500k by not taking a commission fee for crypto transactions during 2019.
Even if users forget their private keys, they can still recover them. As the service providers keep the private keys in their servers, the users can ask them for their private keys.
Having private keys held by custodial service providers can almost eliminate the chance of losing private keys forever as users can recover them again anytime.
Along with taking benefits from custodial services, there cames some drawbacks of using centralized wallets that we’ve discussed below.
The third-party centralized wallet has overall control over your crypto wallets. The total control of your crypto wallets by custodial service can also freeze your crypto wallet account for any restricted actions. That’s why it makes sense to follow all terms and conditions of the specific centralized wallet providers.
The users can’t be anonymous for doing crypto transactions on specific centralized wallet platforms. For registering their crypto accounts, the users need to submit their KYC to the service providers. KYC also assures that the same users can’t open their crypto multiple crypto wallets on the same platform.
There’s no reason left to doubt the security of centralized crypto wallets. But still, there come many cases arise where hackers steal the crypto-coins from centralized crypto exchanges. In 2014, the hackers managed to hack 70% of bitcoin transactions from the Japanese exchange Mt. Gox giving a disastrous loss of $450M.
The users can buy, sell and swap crypto assets in minutes. Users can also earn upto 11% of interest on their crypto holdings. Also, from this platform, the users can access NFTs and Defi tokens straight from the app.
The platform supports 600+ cryptocurrencies. Binance has managed to cover upto 90 million users on its platform. Also, the brand has introduced many unique services such as Binance pay, Binance earns, and so on.
Founded in | 2017 |
Supported platform | Web, Android, iOS |
App rating | 4.5 |
App downloads | 50M+ |
Net revenue | $20 Billion |
The BitMexwallet lets you convert, store and trade crypto assets. Moreover, more features come, such as receiving airdrops and earning interest on purchased Bitcoin and USDT. The platform comes with its only cryptocurrency, known as BMEX.
Founded in | 2014 |
Supported platform | Web, Android, iOS |
App rating | 3.7 |
App downloads | 5k+ |
Net revenue | $1.3 Billion |
BitGo provides a complete institutional platform for digital asset investors. Also, it comes with a BitGo insurance program to help users get money back in case of losing their private keys by the BitGo platform.
The platform provides a stacking option to earn interest on the crypto holdings.
Founded in | 2013 |
Supported platform | Web, Android, iOS |
App rating | N/A |
App downloads | 100+ |
Net revenue | $77 Million |
The platform supports over 150+ coins and allows users to do free transactions within the Freewallet ecosystem. The platform offers lending cryptocurrency, crypto trading, staking, cloud mining, and other valuable features.
Founded in | 2016 |
Supported platform | Web, Android, iOS |
App rating | 4.4 |
App downloads | 500k+ |
Net revenue | N/A |
The users can buy, sell and swap crypto assets in minutes. Users can also earn upto 11% of interest on their crypto holdings. Also, from this platform, the users can access NFTs and Defi tokens straight from the app.
Founded in | 2011 |
Supported platform | Web, Android, iOS |
App rating | 3.9 |
App downloads | 10M+ |
Net revenue | $14 Billion |
The non-custodial wallet is the exact opposite of the custodial wallet. As a non-custodial wallet is a decentralized wallet, the owners keep the private key of their crypto wallets to themselves.
The keys can be stored on hard wallets or noted down on paper, and the keys are available for accessing anytime. Giving them complete control over their crypto wallets makes them responsible for protecting the private keys of their wallets.
It is not possible to recover private keys once they are lost. So it will be better for users to write it down in multiple secure places for creating backups.
Since the user holds the private keys of their crypto keys, it generates some benefits that users can take from non-custodial wallets.
The non-centralized wallet helps users to stay independent from any third-party service providers. As users keep private keys to themselves, they are left with additional options to control their crypto wallets compared to centralized wallets.
Since the private keys of crypto wallets are not available online. It is almost impossible for hackers to steal private keys and take out funding from the crypto wallets.
Having private keys enable users to withdraw money anytime without confirmation from centralized crypto wallet services. The instant withdrawal gives a better way for the user to use their funds anytime they want.
Since the users are responsible for securing their private keys, it creates some drawbacks for these decentralized wallets that we have discussed below:
Users are most vulnerable to losing their funds if they forget or their hardware that private store key. There is no chance to recover it as no one would be there to help you with restoring private keys.
Since users are responsible for handling their crypto wallets, there comes a need to do additional methods to follow by the users within decentralized wallets. Having overall responsibility results in having more buttons and UI elements in the app, and non-centralized wallets, making a complex user experience for new users.
Unlike centralized wallets, there is a trade delay in decentralized wallets. The trade order will go first to their exchanges, and they will execute it whenever they find another interested buyer or seller on their platform.
The users are overall responsible for losing their private keys. Users will lose their crypto funds forever within the crypto wallet. So users will need to be alert to secure their private keys and not share them with anyone.
Check out the best crypto wallet app examples in non-centralized wallets. These examples will help you know how you can create such apps.
Electrum wallet is one of the oldest and most popular platforms. The wallet provides 2-factor authentication to secure users’ funds. Moreover, it comes with many add-ons to improve the wallet’s functionality, giving the best experience for storing and transferring cryptocurrencies.
Founded in | 2011 |
Supported platform | Web, Android, iOS |
App rating | 3.3 |
App downloads | 500k+ |
Net revenue | <$1 Million |
The platform allows more than 200+ cryptocurrencies. It supports multiple platforms such as mobile, desktop, and tricky wallets. Moreover, it has partnered with Trezor to advance the crypto hardware wallet.
Founded in | 2015 |
Supported platform | Web, Android, iOS |
App rating | 4.4 |
App downloads | 1M+ |
Net revenue | $69.4 Million |
Zengo gives an additional option for users to connect with NFT and Defi apps. The apps have multiple security features such as keyless encryption, biometric authentication, and 3-factor recovery.
Moreover, it gives access to Web3 to let users enjoy different decentralized services such as NFTs, Defi, crypto games, and much more.
Founded in | 2020 |
Supported platform | Web, Android, iOS |
App rating | 3.6 |
App downloads | 100K+ |
Net revenue | $24 Million |
Ledger provides Bluetooth-enabled hard wallets for its users. The hardware helps users to store and access their crypto funds offline. The platform allows users to install up to 100 apps on the hardware along with holding upto 5,500 different tokens.
Founded in | 2019 |
Supported platform | Web, Android, iOS |
App rating | 3.7 |
App downloads | 500K+ |
Net revenue | $1.5 Billion |
The brand provides hardware wallets for storing crypto coins. It supports 1816 tokens and crypto coins for storing and transfer. The device allows users to access their crypto portfolio offline by entering their 12 to 24 words long recovery seed. Moreover, the most famous brands, such as Forbes, CNN, Coin Desk, etc., have reviewed this wallet.
Founded in | 2014 |
Supported platform | macOS, Windows, Linux |
App rating | N/A |
App downloads | N/A |
Net revenue | $5 Million |
Wasabi is an open-source bitcoin wallet for desktops providing an integrating functionality with TOR. The wallet creates an anonymous connection between sender and receiver over the TOR network.
Founded in | 2018 |
Supported platform | Android, macOS, Windows, Linux |
App rating | 3.0 |
App downloads | N/A |
Net revenue | $7.5 Million |
Knowing the difference will help you understand and decide which kind of crypto wallet would suit your business.
The users don’t have access to their private keys in centralized wallets. The service provider provides passwords instead of private keys in centralized wallets. While in the case of centralized wallets, the users use their private keys anytime to transfer funds.
The user needs verification from a service provider in the centralized wallet. Talk over the decentralized wallet. Since users have access to private keys, there is no need for taking any verification.
There is more security in the decentralized wallet as the owner doesn’t keep his private keys online. In the case of a centralized wallet, the hacker may get access to the privacy of the crypto wallet and can take out the general funds.
Users can lose their overall funds if they forget the alphanumerical sequence of their private keys in the decentralized wallet. But in the centralized wallet, the recovery of funds is possible as the service providers secure the keys of wallet users in their servers.
It needs an internet connection to access and transfer crypto funds a centralized. Also, for submitting a transfer request, an internet connection is required.
The user can use crypto wallet-based software to transfer the funds to another crypto wallet in a non-centralized wallet.
So, Non custodial wallet vs custodial wallet, which can be more suitable for your business.? Let’s understand.
Custodial wallets are more popular as almost every beginner in the crypto world opens their account on centralized platforms.
But due to some limitations in these centralized wallets, many users are moving towards decentralized wallets to have complete control over their crypto wallets.
Talk over the difference between custodial and non-centralized; each kind of wallet has its unique audience. So keeping targeted users in your mind, you can decide to develop any crypto wallet based on the demands and requirements of your target audiences.
Clearing all your doubts and making your crypto wallet involves contacting some IT experts experienced in blockchain technology. Moreover, you can contact our blockchain experts to get a free consultation on your mobile crypto wallet app business.
Build Better Solutions With Idea Usher
Professionals
Projects
Let’s check some most asked questions that come during the discussion of custodial vs. non-custodial wallets
The main difference between both wallets is that the service provider in centralized wallets owns the private keys. In contrast, in the case of non-centralized wallets, the ownership of private keys is taken by users themselves.
Private keys are passwords for enabling wallets to transfer their funds to other wallets. The private keys come in a series of alphanumeric codes.
The best examples of centralized wallets are as follows:
The best examples of non-centralized wallets are as follows:
Powered by YARPP.
Loves to explore the latest tech trends in the market. I feel motivated to write topics on Mobile Apps, Artificial Intelligence, Blockchains, especially Cryptos. You can find my words engaging and easier to understand, which makes content more entertaining and informative at the same time.
100% developer skill guarantee or your money back. Trusted by 500+ brands
Idea Usher is a pioneering IT company with a definite set of services and solutions. We aim at providing impeccable services to our clients and establishing a reliable relationship.
Idea Usher is a pioneering IT company with a definite set of services and solutions. We aim at providing impeccable services to our clients and establishing a reliable relationship.
Want to maximize growth potential through blockchain development services?Contact us for a free consultation call |
Apply NowBe a part of an energetic, talented, and focused team. |
|
Congratulations on taking the first step towards taking your business to new heights!
We are ready to take you there.
We will soon contact you for more details.
You're closer to success than you think!
Get the MASTER KEY to grow your website sales from scratch.
Are you ready to grow your business?
Hi 👋 Can I help you?
Gaurav Patil