Choosing between a custodial and non-custodial wallet is a key decision when it comes to securing your cryptocurrency holdings.
What is a custodial wallet?
A custodial wallet is defined as a wallet in which the private keys are held by a third party. Meaning, the third party has control over the funds and you have to request transfers, withdrawals, etcetera. Responsibility for the funds is placed with the wallet provider as opposed to yourself, mitigating the risk of losing funds through self-custody by forgetting a password, losing a private key or having a hardware drive corrupted.
What is a non-custodial wallet?
A non-custodial wallet is a type of wallet that lets you be your own bank, essentially. This implies that users have full control over their funds and the associated private key to the wallet that holds their funds. If you want to know more about how wallets work, you can click here. While a custodial wallet comes with the scrutiny of whether the wallet provider can be trusted, many prefer them because they don’t require as much responsibility and are usually more convenient, often offering lower fees and higher speed/efficiency as each transaction or transfer does not necessarily need to be broadcasted onto the blockchain.
Which should you choose?
Losing the password or secret phrase to a non-custodial wallet could be financially devastating if you do not take sufficient precautions. However, if you forget your custodial wallet password you’ll likely be able to reset it.
PayBX is a custodial wallet. This means that users don’t hold the keys to their wallet, but it also means that newcomers to crypto don’t need to learn the ins- and outs of web3 while paying extortionate fees unless they’re operating on layer 2 or a less adopted blockchain — either option still requiring extensive knowledge of the crypto industry. We believe that the path towards mass adoption will not only consist of decentralized options, but also centralized ones with premier security measures. Convenience is king, and here the crypto industry has got some ways to go still.
We don’t pretend to be disrupting the industry. Our goal is to provide a reliable, easy-to-use application that simplifies crypto payments, improves users’ ability to get into crypto, and earn interest on their crypto holdings by putting it to work, and that paves the way for broader adoption of this nascent technology. PayBX is not the single app that will bring mass adoption, but it is one of the applications that will be helping spur the coming paradigm shift.
Interested in learning more about our wallet solution? Visit PayBX.io!