In this case, there’s no central server holding your private keys, meaning your wallet is non-custodial. In contrast, when using a hardware wallet, only you have access to the private keys. For this reason, the exchange acts as custodian and is responsible for securing your crypto. However, when you store crypto in a web wallet, the exchange platform holds your private keys. However, the main difference between a typical bank account and a crypto wallet is that not all crypto wallets are custodial.įor example, in the case of traditional cash accounts, banks are always the intermediary and fulfill a custodial role.
The public key generates an address that lets you receive crypto, while the private key allows you to spend crypto from the same address. In addition, each crypto wallet contains a public and private cryptographic key pair, similar in function to a bank account number and PIN.
If you decide to purchase cryptocurrency, you’ll need to get a crypto wallet first but what is a crypto wallet? Just as regular bank accounts keep your cash safe, crypto wallets keep your digital currency secure.
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