The key difference between custodial and non-custodial wallets is who controls the private keys—and ultimately, your crypto.

Custodial Wallets

The wallet provider holds your private keys (e.g., a crypto exchange like Binance, Coinbase).
Pros:

• Easier to recover funds (password resets available).
• No need to manage private keys.
• Often integrated with exchanges for easy trading.
  Cons:
• You don’t have full control over your assets.
• Higher risk if the exchange is hacked or freezes withdrawals.
• You must trust the third party to keep your funds safe.

Example: Keeping crypto on an exchange like Coinbase, Binance, or Kraken.

Non-Custodial Wallets

You hold your private keys (e.g., MetaMask, Trust Wallet, Ledger).
Pros:

• Full control over your funds.
• Greater security—no reliance on third parties.
• Access to DeFi, staking, and other Web3 applications.
  Cons:
• If you lose your private key or recovery phrase, you lose access to your crypto.
• More responsibility for security (phishing attacks, malware, etc.).

Example: Hardware wallets (Ledger, Trezor) and software wallets (MetaMask, Trust Wallet).

Which One Should You Choose?

Custodial – Best for beginners who prefer convenience and are okay with trusting a third party.
Non-Custodial – Best for those who want full control and are willing to manage their own security.