Discussions about what wallet you should choose for your crypto and threads debating “custodial vs. non-custodial wallet” are all the rage in the crypto community. Let’s take a closer look at custodial and non-custodial wallets to find out all their pros and cons.
What is a non-custodial and custodial wallet?
A non-custodial wallet is a decentralized type of wallet, where the customer owns its private keys. The user gets a file with private keys and needs to write down a mnemonic phrase with which they will be able to restore their funds. Having private keys means that you have full control over the funds. Sounds good, doesn’t it? Yes, but keep in mind, full control of your money also means that you are the only one responsible for your funds.
On the contrary, a custodial wallet is a type of digital wallet which keeps a customer’s private keys and provides backup and security for your assets. Yes, you read that right. Custodials keep users’ private keys on their side. Why do they do that? To control your money?
Actually, custodials strive to provide users with the most convenient way to store crypto. Some people seek secure and customer friendly solutions, which can give them access to their assets at the touch of a button. And there are a few features exclusive to custodial wallets that may give them an advantage over non-custodials
The benefits of a custodial wallet
Lost private keys or mnemonic phrase doesn’t mean lost funds
Many people are not acquainted with blockchain technology very well, and even an experienced crypto enthusiast can forget a mnemonic phrase or lose private keys. You’ve probably heard the story about a guy who lost his hardware wallet with 7,500 Bitcoins on it. With a custodial service, you won’t have to deal with anything like that, even if you lose a phone or your laptop corrupts. Your funds can still be recovered if you happen to break your phone or forget your password.
It is easy to restore access to your wallet. You don’t need to bother about a mnemonic phrase at all. Your account is already backed up by the company and can be retrieved via your email like on any other service.
Free and instant transactions
Every time you send a transaction in the blockchain you need to pay a processing fee. The more you pay – the faster the transaction will be performed. Some custodians allow their customers to send transactions for free within their ecosystem. For example, Freewallet users can instantly make a transaction to other Freewallet users absolutely free of charge, thanks to sidechain technology. Back in 2018, we presented research which shows that our customers have saved over $500,000 on network fees. That includes $400,000 in XMR transactions, $63,000 in Bitcoin and $60,000 in Ethereum. Have you added up how much have you spent on transaction fees already?
Custodials can back you up in case of a mistake
We know that blockchain technology is not rocket science but sometimes a simple mistake can cause you big trouble. You’ve accidentally forgotten to add a memo or a destination tag to XMR and you haven’t received your funds? Not a big deal. You’ve confused BTC with USDT and your money is stuck in the blockchain? No problem, we can retrieve your money. Of course, we are not magicians who can make anything happen with the snap of a finger. It is always a matter of time, effort and resources. Besides, not every transaction is possible to retrieve. Here’s a list of mistakes which we can fix. If you have any doubts and would like to double-check you can always drop us a line.
Is it safe?
And what about security? Keeping users’ crypto funds save from hackers is a significant matter for each wallet provider. To ensure maximum safety of your coins, you can set up a pin code, 2FA, transaction limits and multisig confirmation.
- Your PIN code will protect your coins from intruders.
- 2FA won’t let a hacker access your account from another device.
- Transaction limits won’t let anyone withdraw all your money at once.
- Multisig confirmation will send verification messages on your three registered emails to perform a transaction. The funds will be released only after receiving confirmations from all addresses.
- In addition, a majority of funds are stored in an offline cold wallet, which hackers can’t access.
All these measures stifle hackers and keep your assets safe and secured.
How to enjoy your crypto secure and easily
- Sign up for the app with your Facebook, Google, email or mobile phone.
- Create a PIN code for basic protection.
- Click the “Add Wallets” button and choose the coin you want.
- You are awesome, deposit coins on your address and enjoy your wallet.
We are proud to offer a secure, convenient and accessible method of storing and managing cryptocurrency to everyone. If you have any questions please contact our support team.