Custodial Wallet
A wallet where a third party controls the private keys on your behalf.
In a custodial wallet, a service provider holds users’ private keys and executes transactions upon instruction. This can simplify UX and recovery but introduces counterparty and platform risk.
Non-custodial wallets give users sole control of keys. The trade-off: higher responsibility but no third-party custody risk.
Related Terms
Wallet
→A tool that stores private keys and allows users to interact with blockchain networks.
Cryptocurrency Exchange
→A platform that facilitates the buying, selling, and trading of cryptocurrencies. Exchanges can support crypto-to-crypto or crypto-to-fiat transactions and serve as crucial infrastructure in the digital asset ecosystem.
Private Key
→A cryptographic key used to sign blockchain transactions and derive public keys; ultimate proof of control over funds.
All terms and definitions may update as the Cryptionary improves.
