Custodial Wallets

Custodial wallets are digital wallets where a third-party service, such as a cryptocurrency exchange, manages and stores your private keys—the security codes that grant access to your digital assets. Think of it like a bank holding your money; you're trusting the institution to safeguard your funds and facilitate transactions. This setup offers convenience and ease of use, especially for beginners, but requires trusting the custodian’s security measures. While you retain ownership of the assets, the third-party controls access, making it different from self-custody where you hold your private keys directly.