Logo Cryptotesters

Hub

Academy

Choosing the best wallet

A crypto wallet allows users to hold, buy, send and receive cryptocurrencies and tokens. There are different variants of crypto wallets - the biggest distinction is whether a wallet is custodial or non-custodial.

Learn more about wallets

Custodial Wallets

Custodial wallets hold crypto funds on behalf of their clients. They are equivalent to a bank account in the crypto world.

Compare custodial wallets

How do custodial wallets work?

1. Download wallet
If the wallet is a mobile app starty by downloading the app from the app store.Compare custodial wallets
Register an account by signing-up with your e-mail, password, address etc.
Most wallets need to verify your identity to comply with anti-money laundering regulations. This means you have to upload a copy of your passport to verify your identity.
You can buy crypto assets inside the wallet with a credit card or bank account.
Some custodial wallets also allow you to use your crypto assets productively by lending them and earning interest.

Non-custodial wallets

Non-custodial wallets put users in control of their funds. The wallet provider has no means of accessing or freezing users funds.

Compare non-custodial wallets

How do non-custodial wallets work?

1. Download wallet
Most non-custodial wallets are either mobile applications or browser extensions that you have to download.Compare non-custodial wallets
Non-custodial wallets give you ownership over your private keys controlling your blockchain accounts. Therefore it’s important to backup your secret phrase in a safe manner as it grants you continued access to your funds in case you lose your phone or computer.
In order to start using blockchain applications you will need to fund your wallet with Ether to pay for transaction fees on the Blockchain. This is best done by transfering from a crypto exchange.
Start exploring the world of DeFi, NFT’s and Gaming. If you don’t know where to start check out our academy.
Wallet guide

Custodial vs non-custodial wallets

See the whole guide

Custodial wallets are like banks. They are provided by a centralized entity who controls your assets and saves them for you. If you want to move funds out of your custodial wallet you need to request a withdrawal. Importantly, with a custodial wallet you can’t access decentralized applications (dApps) on the blockchain.

Non-custodial wallets allow you to keep complete ownership of your funds. Holding crypto assets in a non-custodial wallet is the equivalent of holding cash in the real world. Your funds are stored on the Blockchain and you have direct control over them. Most wallets allow you to hold, send & receive funds on multiple blockchains.

FAQ

Frequently asked questions

See all questions

A crypto wallet is a piece of software that enables you to communicate with Blockchain networks in order to send and receive cryptocurrencies. At its core, a wallet consists of a public key, which is your personal identifier, and a private key, which allows you to sign transactions and authenticate yourself to the network.

Both non-custodial and custodial wallets can be “hacked” although it’s unlikely to happen. A non-custodial wallet can be breached if a hacker gets access to your secret phrase, either the encrypted version on your computer or the physical paper backup you have stored somewhere. A custodial wallet provider can be hacked if a hacker manages to get access to the internal security systems and transfer funds out of their centrally managed wallet.

There is no clear cut answer to what is safer. Both carry different trust assumptions. With a custodial wallet you trust a company to be honest, diligent and take the security of your funds seriously. With a non-custodial wallet you trust yourself and your ability to backup your seed phrase safely without other people having access to it.

A common misconception is that crypto transitions are anonymous and that there is no way for governments to find out whose identity is behind a wallet. This is wrong. A blockchain is a public ledger where every transaction can be traced back to its origin. In most cases the funds originated from a centralized exchange in which case there will be know identity since users have to verify themselves.

A hardware wallet is a device you use in combination with a non-custodial wallet app. Instead of storing the private keys on your device (mobile or computer) the private keys are stored in a small highly secured USB-shaped stick which you need to connect to your app in order to sign transactions. Some people like the security it gives you as a computer or phone can be hacked but a hardware wallet can’t.

Academy

Browse videos, guides, and courses to start out in the crypto world.

Learn More
Podcasts

Explore about everything that’s poppin’ in Crypto.

Learn More
Community

See what we do on social. Explore Podcasts, quick tips etc.

Learn More
Cryptotesters Logo

We are a multi-faceted team of crypto enthusiasts based in Berlin.

© 2021 cryptotesters UG

Stay up to date!  Sign-up for a monthly roundup of the newest crypto products


Products

How to buy bitcoin

Cryptocurrency exchanges

Crypto wallet guide

Crypto savings accounts

Defi lending rates

Crypto cards

Exclusive crypto deals

Ethereum staking

Resources

Articles

Reviews

Podcasts

Tutorials


Twitter logoLinkedIn logoFacebook logo
Cryptotesters Logo

We are a multi-faceted team of crypto enthusiasts based in Berlin.

© 2021 cryptotesters UG