Let's explore the types of wallet we have
Types of crypto wallet
There are two main types of wallets:
Custodial wallet and
Noncustodial wallet
1)Custodial wallets; are wallets where a third party like CEX exchanges(bybit, binance, okx e.t.c) stores your keys for you. Custodial wallets are very easy to access and are good for newbies or users who don’t want to fuss too much with security, and who aren’t concerned with trusting a third party to their private keys. Because of risks like hacks, or even an exchange going bankrupt (which has happened before), it’s generally not advisable to keep large amounts of cryptocurrency in a custodial wallet.
2) Non Custodial wallets; are wallets where you store your own keys. Instead of third parties like crypto CEX exchanges having custodial access, you have full control over your digital assets. Users with non-custodial wallets are their own banks with access to their funds. These non-custodial wallets are ideal for experienced traders ready to shoulder the great responsibility of storing their keys safely. Many in the crypto industry believe in the maxim: “not your keys, not your coins”, meaning that If you lose access to your private key, you lose all of your crypto assets, it's difficult to retrieve a lost private key for non-custodial wallets, so you need to be extra careful.
We have two types of non-Custodial wallets as well;
1)Cold wallet(has no connection to the Internet e.g hardware wallet like, ledger, trezor model T e.t.c )
2)Hot wallet(has an Internet connection e.g metamask, trust wallet e.t.c)
Stay tuned for my next post where I'll write about the wallet keys we have