Aside those who are newbies when it comes to the cryptocurrency ecosystem, we all should at this stage in life knows that when it comes to the cryptocurrency ecosystem and the blockchain at large, you should be able to boast that you own a fund if only you have the right and privileges over that fund. Over the years we all saw how some person falls prey to some exchanges. I know that they are many people out there who will be eager to jump out by asking me the question of how such person's falls prey to those centralized exchange. As for your information and before I key into this post properly, I will like to remind us that while writing this post, they are some key words that we will be coming across. To start with, words like centralized and decentralized exchange are words that comes to the table. The main reason why I am bringing those words into the scene is holding to the very that I wanted us to understand this post to the fullest. It should be a post on Custodial and Non custodial wallet that will act as guide to experienced and novice as to when it deals and relates to the cryptocurrency ecosystem and the blockchain at large. If we are able to come up with post like this that is detailing in all aspect, we might be able to solve a lot of issues when it comes to the cryptocurrency ecosystem and the blockchain at large. I remembered how I have come across different cryptocurrency post by different authors discussing about the topic that I am about discussing on, I am so glad that with those authors detailing me on what custodial wallet and Non Custodial wallet is, I was able to have firm foundation is on what the cryptocurrency ecosystem is and also how to manage your cryptocurrency fund.
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Before I go into detailing or discussing about what a custodial and non Custodial wallet is, I think it will be a good thing knowing about what a centralized and decentralized exchange is. If you dig in further you will discover that when it comes to the cryptocurrency ecosystem, the word centralized exchange and decentralized exchange are almost same thing like the Custodial and Non Custodial wallet. Instead of beating around the bush, permit me to go straight to the point. As for the benefit of this post I will be trying all I could into ensuring that I hit the nail on the head.
As for your information, a centralized exchange simply means that you don't have control over your fund while decentralized exchange gives you custody over your fund. Going further, I will say that popular examples of centralized exchange are Binance, Huobi, Gate.io, Okx, coinbase, Kraken, Crypto.com, Upbit, Kucoin, Bitstamp, etc. As per decentralized exchange, with what I said above, you have control over your fund. Funds do not need to leave your cryptocurrency wallet before you can boast of trading it. Exchanges like Uniswap, Pancakeswap finance, Dydx, Balancer, Sushiswap, 1Inch etc are all examples of a decentralized exchange.
Now that we have known what centralized and decentralized exchange is, it is now time to know what a Custodial wallet and Non Custodial wallet is.
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A custodial wallet is just like a centralized exchange. With a centralized wallet you should knows that you don't have the private keys to your cryptocurrency system. It shows that there is someone or a system incharge of your cryptocurrency keys. If the exchange is being hacked it shows that your money or fund might be in danger because you might not have the means to be able to remove your fund from such exchange since you don't have access to such exchange keys. This is why people keep saying that not your keys, not your cryptocurrency. Before you consider using a centralized exchange you should knows that you won't be able to have access to your cryptocurrency keys. With that in place, you should knows that your fund aren't your funds.
Non Custodial wallet on the other hand means that you have full access to your fund. It shows that you have your cryptocurrency keys being it the seed phrase or key phrase. In as much you have access to such key and in as much you can control your account, it shows that you have access to your fund. This in turn give you self custody over your fund. We all knows that wallet like Metamask, Trust wallet, Token pocket wallet, Tron wallet etc. I believe with this post we can boast of knowing the difference between a Custodial wallet, Centralized exchange, Non-Custodial wallet and decentralized exchange.
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I will end the post here, have a nice day.