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Understanding Wallets: Centralized (Custodial) vs Decentralized (Non-custodial):
A Centralized or Custodial wallet is one for which you don’t have full access over your cryptocurrency (no private key), but usually services are offered to the consumer such as instant sell/buy bitcoin, bitcoin credit card or no transaction fee. (Example: Coinbase and CashApp)
A Decentralized or Non-custodial wallet places you in control, and you have the responsibility. Non-custodial wallets grant consumers full access over their cryptocurrency (consumer is given a private key), but without much service. (Example: Token Pocket, Trust Wallet and Meta Mask)
*Also important is privacy
Many prefer to use decentralized wallets for receipt of cryptocurrency. Consumers will then send their cryptocurrency to an exchange, which uses custodial wallets, to "cash out" (convert to Fiat to withdraw to a bank account). Examples of exchanges include Binance.US, Crypto.com and KuCoin. Consumers can also send their cryptocurrency to various KYC required Crypto debit cards such as BitPay, BlockCard and others.
Centralized vs Decentralized Wallets
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