What are the differences between a self-custodial wallet and a centralized wallet?

3 answers

• Nov 23, 2021 · 3 years ago
  A self-custodial wallet, also known as a non-custodial wallet, gives you complete control over your cryptocurrency funds. With this type of wallet, you are responsible for managing your private keys, which are used to access and transfer your funds. This means that you have full ownership and control over your assets, but it also means that you bear the responsibility for keeping your private keys secure. On the other hand, a centralized wallet is managed by a third-party service, such as a cryptocurrency exchange. While this type of wallet may offer convenience and additional features, it requires you to trust the service provider with the custody of your funds. This means that you do not have direct control over your assets and are dependent on the service provider's security measures and policies.
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• Nov 23, 2021 · 3 years ago
  When it comes to security, self-custodial wallets are generally considered to be more secure than centralized wallets. Since you have control over your private keys, the risk of your funds being compromised due to a security breach or hacking attack is significantly reduced. However, this also means that you need to take extra precautions to protect your private keys from loss or theft. Centralized wallets, on the other hand, may offer additional security measures such as two-factor authentication and cold storage, but they are still more vulnerable to hacking attacks and insider threats compared to self-custodial wallets.
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• Nov 23, 2021 · 3 years ago
  At BYDFi, we believe in the importance of self-custodial wallets for the security and privacy of our users' funds. By using a self-custodial wallet, you can ensure that you have full control over your assets and reduce the risk of unauthorized access or loss. We recommend using hardware wallets or software wallets that allow you to control your private keys. Remember, the security of your cryptocurrency funds should always be your top priority.
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