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Custodial vs Non-Custodial Wallets: Which is Better?

Custodial vs Non-Custodial Wallets: Which is Better?

Short Answer: The primary difference is control.

Custodial Wallet: A third party (like an exchange) holds your private keys for you.
Non-Custodial Wallet (like NOW Wallet): You – and only you – hold and maintain your private keys.

Think of it like the difference between storing money in a bank and storing gold in your own safe. One is being held for you, the other is held and controlled by you, and only you.

Custodial wallets offered by exchanges are convenient for trading, but they come with a fundamental trade-off: you don't truly own your assets. As the saying goes, "not your keys, not your crypto."

A non-custodial wallet, however, ensures your keys — and therefore your coins — are always yours.

A Quick Comparison

Feature	Non-Custodial Wallet (Decentralized)	Custodial Wallet (Centralized)
Control of Funds	You're in complete control. Private keys stay in your hands.	The service provider holds the keys. You must trust them.
Security Model	Security built-in — funds are only as safe as the seed phrase. No third-party risk.	"Trust us" model. The platform manages security. If it's hacked, your funds are at risk.
Ownership	True ownership. Your crypto is truly yours.	IOU. The platform is keeping the crypto on your behalf. It's not under your direct control.
Recovery	Personal responsibility — the seed phrase is the way back in.	Account Recovery. You get back your password via the platform support.
App compatibility	Works seamlessly with dApps, DeFi platforms, DEXs, and other Web3 tools.	Is not compatible with decentralized applications.

Why Choose a Non-Custodial Wallet? The Power of True Ownership.

Choosing a non-custodial wallet is choosing the very spirit of cryptocurrency: decentralization and self-sovereignty.

Be Your Own Bank: With a non-custodial wallet, you eliminate the risk of a centralized exchange being hacked, frozen, or going bankrupt. Your funds aren't in anyone else's custody.
Access the Whole Crypto Universe: Non-custodial wallets are the sole means of directly accessing DeFi protocols, NFT marketplaces, and dApps. You can truly use the decentralized web.
Unmatched Privacy: You don't need to present your ID to create a wallet. You're in charge of your own data.

With a non-custodial wallet, you're taking an important step toward financial freedom and security. You're not only holding crypto; you're holding on to digital freedom.

Conclusion: Secure Your Freedom

Ultimately, the choice between a custodial and a non-custodial wallet depends on your priorities: convenience for trading or independent control over your assets. While custodial services provide simplicity, a non-custodial wallet is the gateway to truly personal and self-sovereign finance. It ensures that you — and only you — have the ultimate authority over your digital wealth. For many in the crypto space, this peace of mind and independence is the ultimate goal. If this vision of independence resonates with you, download NOW Wallet and experience true ownership — where you control your keys, your crypto, and your financial future.

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