Custodial vs non-custodial wallets

Hello crypto newbies far and wide ??

Our ‘Explain it like I’m 5’ Series is back with another bite-sized nugget of blockchain-based knowledge.

Today we’re all about custodial vs non-custodial wallets. Let’s dive right in.

Let’s take custodial wallets. They’re called like this because they have full custody over your funds. Think about it just like giving some money to your mom for safekeeping.

She’s in charge of taking care of your money, and whenever you need to buy something she gives you the necessary amount. Sounds good in theory, but what if you need to buy something and your mom is not around? What if her purse gets stolen? What if she leaves it in a taxi? What if she spends it? ??

This is what having an account on a crypto exchange (custodial wallet) looks like. They control your funds and give you some when you need it. But sometimes withdrawals are disabled, sometimes the exchange gets hacked, and sometimes the CEO decides to ride into the sunset with everybody’s cash. All isolated scenarios of course, but very much possible nevertheless.

Now let’s take a look at non-custodial wallets (like #xPortal). You can think about these wallets like having your very own digital piggy bank. You have full control to add and remove money freely and don’t need to ask mommy whenever you want to spend some. With full control though, comes full responsibility. Responsibility to never lose the key to your piggy bank, and to never give it to anyone, regardless of what they promise to give you back.

Both custodial and non-custodial wallets come with unique advantages. If you don’t want to deal with the intricacies of creating a crypto wallet and managing your funds, then a custodial wallet would be a great choice for you.

On the other hand, if you like to be in control and have full ownership of your funds, a wallet like #xPortal is just what you need.

In our view, no company or person should really hold your money. Because your money shouldn't be... ?? in custody. That's why, at #xPortal, money meets freedom. ??

Choose with care!

#ExplainItLikeImFive