The variety of cryptocurrency wallets often makes it difficult for investors to distinguish them. To solve this problem, the most important thing to classify their different properties is the control of wallet assets. At present, it is mainly divided into managed wallets and blockchain wallets. A simple sentence cannot let everyone understand what is the difference between managed wallets and blockchain wallets? Specifically, a custodial wallet is a type of wallet in which the private key is kept by a third party. The blockchain wallet is a tool software that allows people to manage their own blockchain accounts and interact with decentralized applications (dApp). Next, the editor will talk about it in detail.
There are differences between managed wallets and blockchain wallets in private key management and asset control.
A custodial cryptocurrency wallet is a wallet that escrows assets to a third party. This means that the private keys are held by a third party, you do not have complete control over the funds, and you cannot sign transactions yourself. While some believe that custodial wallets can be risky, using this type of service is not necessarily a bad thing. It can provide additional security, especially for users who are unfamiliar with the technical details or are worried about losing their private keys. But be sure to choose a trustworthy service provider and understand their security measures.
Some cryptocurrencies are not inheritable because only the original owner who holds the private key has access. To avoid this, you can share asset access with your custodian. Even if you accidentally forget your password to a cryptocurrency trading platform, you can recover your account and assets by contacting customer service. With non-custodial wallets, you must keep your cryptocurrencies safe. Therefore, custodial wallet services are more suitable for most users.
Blockchain wallet is a tool for managing the keys and addresses of blockchain nodes. It is a software program that stores cryptocurrency assets. Allows users to manage different types of cryptocurrencies, such as Bitcoin or Ethereum. Blockchain wallets can help people exchange currencies easily. Transactions are secure because they are cryptographically signed. The wallet is accessible from web devices, including mobile devices, and maintains user privacy and identity.
This type of wallet is ideal for users who want to have complete control over their funds, as it does not involve the intervention of any intermediaries. You can trade cryptocurrencies directly from your wallet. This is a good option for experienced traders and investors who know how to keep and protect private keys and mnemonic phrases properly.
Choosing a custodial wallet or a blockchain wallet depends on individual needs, preferences and usage scenarios, as well as the digital assets that need to be stored.
Hosted wallets are a more user-friendly option, especially for people who are less familiar with private key management and backup. Managed wallets provide comprehensive user support where users can seek help if they encounter problems. For those users who have forgotten their password or lost their access information, some custodial wallets also provide forgotten password recovery options.
The security of user assets in hosted wallets completely relies on the service provider. If the service provider is attacked or has problems, the user's assets may be affected. Managed wallets usually have some restrictions on user operations and may not be suitable for users who seek complete control.
Blockchain wallet allows users to directly control private keys, with higher security and control. Users can manage and use their digital assets more freely without restrictions from third parties. Blockchain wallets are more in line with the decentralization concept of blockchain technology, and users can interact directly with the blockchain network.
Blockchain wallets may have a certain learning curve for novice users, especially when it comes to the management and backup of private keys. Users need to be responsible for their own private keys and backups. Failure to be careful may result in the loss of assets. Some blockchain wallets may lack features related to user support, and users may need to rely on community or online resources when they encounter problems.
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