Security crypto wallet
Security of cryptocurrency wallet
Many users have heard about custodial and non-custodial wallets, but not everyone knows about their differences. Which one is safer and more secure, we explain in simple words.
How cryptocurrency wallets work
A cryptocurrency wallet is a tool used to interact with the blockchain network. It can be used to send and receive cryptocurrency, as well as access decentralized applications
A cryptocurrency wallet consists of two main components — a public key and a private key.
- If someone wants to send cryptocurrency, they can use one of the addresses generated by the wallet’s public key. The wallet addresses and the public key can be shared with other users.
- A private key, on the other hand, is similar to a confidential password in that it signs transactions and provides access to funds. As long as the private key is kept secure, the owner can access the cryptocurrency from any device.
What is a custodial wallet
A custodial cryptocurrency wallet is a wallet in which private keys are stored and managed by a third party on your behalf. In other words, the owner of such a wallet does not have full control over his or her funds and cannot sign transactions. But a custodial wallet also has its advantages.
If the private keys are compromised or lost, the user will lose access to their cryptocurrencies forever. Such incidents can be prevented by sharing keys with the custodian.
What is a non-custodial wallet
A non-custodial wallet allows users to own and control their private keys. This option is best for those who want to manage their own funds. Since there are no middlemen in this case, non-custodial wallet owners can trade cryptocurrency directly. This is a suitable option for experienced traders and investors who know how to use and protect their private keys and Sid-phrases.
Top 5 wallets
1 — Ledger
This is a cold non-custodial wallet that supports almost all known cryptocurrencies and blockchains (Bitcoin, Etherum, Solana, Polkadot).
At first, it may seem like you’re dropping cryptocurrency in there like on a flash drive, but it’s not. It’s the same window to the Web3 world, but with extra protection.
2 — Trezor.
Another cold non-custodial wallet that stores your cryptocurrency and without physical access to it there is no access to cryptocurrencies. The essence of work is about the same as Ledger.
3 — Trust Wallet
Trust Wallet is a non-custodial wallet, a mobile app.
TW displays NTF-tokens, which is also important with the current boom in development of this sphere.
4 — Metamask
Metamask is the most popular browser resolution wallet. Also a non-castodial solution.
5 — Safepal
Originally positioned as a hot wallet — mobile app.
Similar to Trust Wallet in many ways. Same universal access to many blockchains, apps, internal token exchange and interaction with web3, need for native cryptocurrency for transactions within ecosystems.
But over time they also released a hardware wallet, so it makes more sense to compare it to Ledger/Trezor.
Which wallet is better, custodial or non-custodial?
Most users use both types of wallets depending on their specific needs. To have full control over assets and use blockchain technology to interact with DeFi applications, choose a non-castodial wallet. However, if you are looking for a service provider that can take care of storing assets while you trade or invest, it is better to opt for a reliable custodian.
Remember that no matter what type of wallet you have, you should always be careful and use reliable methods to protect your funds.
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Tags: #wallet #metamask #trustwallet #ledger #safepal
