Wallets play a fundamental role in crypto security and, depending on the option you choose, can often mean the difference between keeping or losing funds in certain situations.
Generally speaking, there are two main types of crypto wallets that you will need to consider:
Each option has its own advantages and disadvantages and suits different needs depending on your investment objectives, technical experience and risk tolerance.
In the latest Kraken Learn Center article, we break down the details of each of these wallet options so you can make a more informed decision on how you choose to protect your crypto. Check out one of our latest articles to get all the details you need.
The main defining characteristic between a custodial and non-custodial crypto wallet is who ultimately controls the private keys to it.
With custodial wallets, the private keys are managed by a third party. This involves trusting an intermediary, such as a cryptocurrency exchange like Kraken, to securely secure your funds on your behalf.
With non-custodial wallets, the responsibility for storing and securing the private keys lies solely with wallet owner. This means that if you choose to secure your own assets, you must bear the burden of ensuring that they are properly stored and protected only against cyber threats and physical threats.
Ultimately, when it comes to choosing between custodial and non-custodial wallets, you will need to weigh what is more important to you; comfort or safety.
If the former, then custodial options like holding crypto on Kraken may be better suited to your needs. If the latter is more important, then a hardware wallet device or non-custodial web-based solution is probably a better option.
Have more questions about the difference between custodial and non-custodial crypto wallets? Want to learn more about the pros and cons of both options? Need more details on how to protect your crypto?
Check out the latest article from the Kraken Learn Center What are custodial and non-custodial crypto wallets?
These materials are for general informational purposes only and do not constitute investment advice or a recommendation or solicitation to buy, sell or hold any digital asset or to engage in any specific trading strategy. Some crypto products and markets are unregulated and you may not be protected by government indemnities and/or regulatory protection schemes. The unpredictable nature of crypto-asset markets can lead to loss of funds. Tax may be due on any return and/or increase in value of your Crypto Assets and you should seek independent advice on your tax position.
