Custodial vs Non-Custodial Wallets: What's the Difference?

If you decide to invest in crypto, the first thing you should think about is how to protect your investments. The best way is — a crypto wallet. Though there is such a variety of crypto wallets it is difficult to choose which one is the best for you.
Crypto wallets can generally be split into two broad categories: custodial and non-custodial wallets.
Both custodial and non-custodial wallets have their pros and cons. Let's see the difference:

A custodial crypto wallet

A custodial crypto wallet is a service or an exchange in which the private keys are held by a third party. In other words, the holders won't have full control over their funds, they only have to give permission to send or receive payments.

Advantages of custodial crypto wallets:

• If the holder loses their private key custodial wallet can restore access to your account;
• Do not demand a transaction fee;
• It is easier to undo any transaction or restore a previous version in a custodial wallet.

Disadvantages of custodial crypto crypto wallets:

• Third party's control over your money;
• The custodial wallet can freeze your funds in case of maintenance or due to KYC requirements;
• You can't log in or perform any transaction offline.
• There is always a risk that your money may be stolen in case of hacking attacks.

A non-custodial crypto wallet

A non-custodial crypto wallet is a wallet where only the holder possesses and controls the private keys. For users who want full control over their funds, non-custodial wallets are the best option.

Advantages of non-custodial crypto wallets:

• Full control over your money;
• More secure because the risk of data breach is much lower;
• Do not need confirmation from a third party for performing every transaction.

Disadvantages of non-custodial crypto wallets:

• In case you lose your private key you'll lose all your money.

Source: ArcticWallet

What type does Arctic Wallet belong to?

Arctic Wallet is a non-custodial multi-chain wallet that supports more than 200 crypto assets. The main features of Arctic Wallet are:

• Allows you to store multiple crypto assets on 25+ chains;
• Enables cross-chain transactions;
• Has built-in exchange;
• Integrates charts to follow the price in real-time;
• Offers lower fees than any exchange wallets;
• Has Mobile (Android), Desktop (macOS, Windows, Linux) apps;
• Ensures privacy as all the data is encrypted and stored on your device, not authority servers.

Source: ArcticWallet

Conclusion

If you need to ease your transactions, instantly buy/sell, and exchange crypto without moving your funds into exchanges and back a non-custodial software wallet is the best way to keep your funds.