You have two options to store your cryptocurrency: a custody wallet or a non-custody one. This decision will depend on what type of storage is most appropriate for various purposes, such as security and convenience.
With a non-custodial wallet, you always maintain full custody of your private keys and can prove they are yours. You don’t need to trust any third party when using one since there’s no way for them to access it except through physical theft. But this also means taking extra precautions, just like anything else worth protecting. If you lose your keys, you lose your coins.
With a custody wallet, you are trusting another party with your funds. This may be an exchange or someone else entirely until you decide to trade again. The good thing about custodial wallets is that you never have to worry about remembering private keys. However, the downside is that if the entity you entrust with your crypto is not above board in its dealings, they can refuse to return your crypto. In a market as unregulated as crypto, there is little you can do to get your assets back if this happens.
Both types of wallets have their pros and cons. To help you choose the right one, here is an in-depth look at each of them. At the end of this article, you should be able to make an informed choice between using a custodial or non-custodial wallet.
The Pros and cons of custodial wallets
Lower personal responsibility
With a custodial wallet, you do not have to worry about storing your keys well. That’s because you can always contact the company giving you custody to give you a new set of passwords. For instance, if your crypto custodian is an exchange, all you have to do is click on forgot password and follow instructions. You can always call or live chat with the exchange support team if this doesn’t work.
It opens up the doors to trading
With a custodial wallet, you can trade from it and invest in sophisticated financial instruments such as ETFs. Of course, this comes with fees, but for the option to make money trading sophisticated financial instruments, it’s worth it.
Disadvantages of custodial crypto wallets
The biggest drawback to custodial wallets is that you would lose all your assets if the custody entity folds up or goes rogue. Many times, exchanges have folded up in the past, leading to losses in the billions of dollars for investors.
The Pros and cons of non-custodial wallets
You are in charge of your crypto
The idea of a non-custodial wallet is to give you back the control and safety that comes with owning your coins. Some people prefer storing crypto on exchange accounts, but for those who want more freedom, there’s no need because this type provides it without any third party involved. When you store your crypto in a non-custodial wallet, things like exchange hacks or regulations that limit access to exchanges in certain countries can’t worry you.
These wallets are easily accessible.
They come in many different forms – some look like USB storage devices with screens and buttons, while others work solely through browsers or mobile apps. Those accessible through mobile apps and browsers offer the same flexibility as custodial wallets. For instance, you can instantly access your coins and trade in real-time. This is advantageous since you do all this while retaining complete control over your assets.
You are fully protected from malware and other cyber attacks.
Non-custodial crypto wallets are the safest way to store your digital currency. Hardware wallets, to be specific, sign transactions offline before sending them onto a computer or phone’s network, preventing any malware infection from accessing funds when transacting. This is a big deal, given that malware attacks are among the ways that cryptocurrency users lose their coins.
Cons of non-custodial wallets
If you don’t want to deal with the stress of relying on a third party, a non-custodial wallet is a perfect fit. However, as mentioned earlier, this comes with the burden of having to shoulder the responsibility of storage yourself. By becoming your bank, you have to deal with the fact that you have no insurance or protection. If you misplace your private keys, there is no one you can turn to for restitution. Your coins are gone for good! It’s a burden that can be too heavy for some investors, especially retail investors, to shoulder.
Which one to choose
The choice between a custodial and non-custodial wallet comes down to security. Some prefer the added protection of holding funds in an exchange account, while others go for safer cold storage options like paper wallets.
Since most non-custodial wallets allow for trading from within the wallet, they have become a favorite with many investors. The burden of being in charge of private keys can always be managed by distributing the keys among a few trusted people or even buying a safe.
Non-custodial wallets have also been made popular by the increasing regulatory and security risks that many cryptocurrency exchanges face today.
Best non-custodial wallet to choose – PTPWallet
There are lots of non-custodial wallets to choose from today. However, from our research, one of the best among them is the PTPWallet.
Besides this wallet giving you complete control over your private keys, it comes with several other advantages that you can’t easily find elsewhere. Among them are as below:
When you pay for something using the PTPWallet, you earn cashback. Essentially, you get to grow your crypto portfolio while at the same time spending your coins on the things you love.
Customized loyalty programs for businesses
Loyalty programs are among the best, time-tested techniques to win clients. With the PTPwallet, a business can set up a loyalty program in its crypto sales. This can lead to an increase in sales over time.
Instant deposits and withdrawals
With the PTPwallet, you can send and receive your cryptos instantly. Businesses that choose this wallet for payments can set it up so that they can receive payments via mail or SMS.
Low transaction fees
With the PTPwallet, you can enjoy some of the lowest fees in the market. This can give you a significant edge over other companies in your industry.
With the PTPwallet, you can store and transact in more than 400 cryptocurrencies. This makes it a perfect wallet for anyone looking to diversify their crypto portfolio.