![]() ![]() Note that with self-custodial wallets like the Wallet, you can also buy, sell, and trade cryptocurrencies. While such exchanges are useful for buying, selling, and trading cryptoassets, when you use these exchanges, your crypto is held in trust by the exchange. Centralized cryptocurrency exchanges (Coinbase, Binance, etc.) provide custodial cryptocurrency wallets (sometimes known as 'web wallets'). Are all cryptocurrency wallets self-custodial?Ībsolutely not. What's the difference between self-custodial and non-custodial? This includes backing up your wallet and adhering to password management best practices. Of course, with great power comes great responsibility! Since you're the only one with access to your funds, you need to manage your wallet carefully. This makes it nearly impossible for the service provider (in our case ), a government, or anyone else to prevent you from using your funds exactly as you wish. Secondly, only you have access to your funds. There's no account approval process, meaning anyone in the world can download the app and start using it immediately. When you use a self-custodial wallet (like the Wallet), first of all, you don't need to ask for permission to use the service. ![]() ![]() In the self-custodial model, the customer retains full custody (possession) of their assets at all times, using the service provider merely as an interface for conveniently managing their assets. With the advent of blockchain-supported decentralized systems - of which Bitcoin is the primary example - it became possible, for the first time, to provide self-custodial financial services at a large scale. Another, perhaps more insidious example, is Operation Choke Point, where the US government pressured banks to deny service to people involved in a variety of (legal) industries it had identified as morally corrupt. For example, a government may force banks to restrict withdrawals in an attempt to stop runaway inflation, as happened in Greece in 2015. Further, even when service providers uphold the custody rights of their customers in good faith, factors outside of their control may force them to deny you access to your money. Banks can and regularly do deny such permission, and their reasons for doing so do not always align with the best interests of individual customers. This means, for example, that when you want to make a withdrawal from your bank account, while you may have a legal claim to the money, the reality is that you're asking for permission from your bank. In modern finance, it's standard practice for service providers like banks to retain custody of your assets. ![]()
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