Types of Crypto Wallets
One of the most important parts of managing and protecting your digital assets is selecting the appropriate cryptocurrency wallet. Carefully assessing the security features and reputation of the wallet provider is crucial, even if you choose the convenience of a software or mobile wallet or the increased security of a hardware wallet.
1. Custodial Wallets: These wallets are built into centralized exchanges like Binance, Coinbase, or Kraken. In this case, the exchange holds your private keys for you, making the whole process smoother, especially for beginners. But there’s a trade-off: you’re trusting the exchange to keep your assets safe. High-profile cases like Mt. Gox, Bybit hacks, and the FTX collapse show just how risky that can be.
2. Non-Custodial Wallets: With non-custodial wallets (like MetaMask or Trust Wallet), you control your private keys. This gives you more security and freedom, but it also means you’re fully responsible for keeping your keys safe. These wallets are ideal for those who value control and decentralization.
3. Hot Wallet:  Hot wallets stay connected to the internet, which makes them fast and convenient for transactions. They can be either custodial or non-custodial. Just remember—they’re more exposed to cyber threats, so strong passwords and 2FA are a must.
4. Cold/Hardware Wallets: Cold wallets, including hardware wallets like Ledger or Trezor, keep your keys offline. This makes them much safer from hacks. Depending on who holds the keys, they can be custodial or non-custodial.