One question separates every wallet from every other: if the company disappeared tonight, would your coins still be reachable?

Wallet software comes in dozens of shapes, and the differences that get advertised — supported networks, staking built in, the look of the interface — are rarely the differences that matter. There is one question underneath all of them, and it decides what happens on the day something goes wrong.

Custodial: somebody else holds the keys

An account on an exchange is the clearest example. The coins sit at addresses the company controls, and your balance is a line in their database saying what they owe you. The blockchain has never heard of you.

This arrangement has real advantages, and pretending otherwise would be dishonest. Forgotten password? There is a reset. Sent to the wrong place inside the platform? Support can often fix it. Someone breaks into your account? There may be a freeze, an investigation, sometimes reimbursement.

The cost is that all of it depends on the company continuing to exist, staying solvent and choosing to act. Withdrawals can be paused. Accounts can be frozen for reasons nobody explains. And when a custodian fails, its customers are creditors in a bankruptcy — which is a queue, not a guarantee.

Non-custodial: you hold the keys

Here the wallet generates a seed phrase on your device and derives keys from it. The software is a viewer and a signing tool. Delete the app and the funds are untouched, because they were never in the app — they are on the ledger, reachable by anyone with the keys.

Nobody can freeze it, nobody can seize it by writing to a company, and nobody has to approve your withdrawal.

Equally, nobody can undo anything. No reset, no support, no reversal. If the phrase is lost, the funds are visible forever and unreachable forever. If someone else reads it, they take everything and there is no complaints procedure. The page on keys and seed phrases is the one to read before you rely on this.

The choice is not permanent, or exclusive

Most people who have been here a while use both, split by purpose rather than by principle.

1. Custodial for the doorwayBuying, selling and converting to your local currency. The place where money enters and leaves, and where a support desk is genuinely useful.
2. Non-custodial for holdingAnything you intend to keep. The amount you would be upset to lose belongs where only you can move it.
3. A separate wallet for experimentingConnecting to sites, trying applications, claiming things. Kept nearly empty, so a bad signature costs pocket change.

How to tell which one you are using

The marketing will not always say. Two reliable tests.

Were you shown a recovery phrase during setup? If yes, and the app made you write it down, it is almost certainly non-custodial. If you registered with an email address and a password, it is custodial.

What happens if you forget the password? A "reset my password" link means somebody else can reach your funds — which is precisely what custody means.

There is also a middle category worth naming: wallets that split your key into pieces and store some of them with a provider, so recovery is possible without a phrase. These are neither of the two above. They are a design trade-off, and the question to ask is what the provider could do if compelled, or if breached.

What this means in practice

Decide deliberately, per pot of money, rather than by default. Money you are actively trading can reasonably sit on a platform. Money you are holding should not, and the moment to move it is before you have a reason to.

The next page covers where non-custodial keys can actually live — on the phone in your pocket, or on a device that never touches the internet.