Non custodial and custodial

[okyeresam]

Can someone please brief me the difference between the two.
Thanks

[Yogee]

In simple terms,

Non-custodial means you fully control your wallet and funds. Your private keys and seed phrases that allows you to access the wallet are in your care.
Custodial means the wallet provider has the private keys or seed phrase. That also means they can lock you out of "your" funds at any time.

If you don't have a wallet yet, you should look for non-custodial and preferably open source like Electrum. Most recommended are hardware wallets like Trezor and Ledger. Check this guide https://bitcointalk.org/index.php?topic=1631151.0

[Upgrade00]

The above reply pretty much covers it.
• In custodial wallets you access your funds through a service provider such as an exchange, they store your private keys and identify you using your uniques details, such as email and password. When you make a transaction on such a platform it is queued up for verification after which it is broadcasted to the network.
You can regain access to your account if you lose it using your email as proof of identity.

• Custodial wallets gives you full control over your funds, your private keys is encrypted and only accessible to you for signing transactions and is not stored by the wallet server.
Endeavor to back up your seed phrase (which corresponds to your private keys), if you lose access to your custodial wallets without a back up, it is impossible to recover.

[plast555]

@Yogee has explained it well. I would like to aid up some none custodial and custodial wallets here:

Here is a small list of None custodial:
Online and webwallets:
Blockchain.com
Bitpay.com
Coinomi.

Offline:
Desktop and Hardware Wallets
Electrum
Bitcoin-Core
Ledger

and Here is a small list f custodial wallets:
Coinbase.com
Circle
Ownr Wallet.
And All CEX exchanges are custodials as well.

[20kevin20]

Here is a small list of None custodial:
Online and webwallets:
Blockchain.com
Bitpay.com
Coinomi.

Offline:
Desktop and Hardware Wallets
Electrum
Bitcoin-Core
Ledger

I am very sure BitPay is custodial. Coinomi went closed-source a while ago and I'm not sure how non-custodial Blockchain's wallet really is. They promise not to hold your keys, but you never really know.

Also, Ledger Live doesn't work offline.. does it? AFAIK, you have to have an active internet connection to use it - unlike Electrum and Bitcoin Core. Remember that some platforms only give you the impression of having control when, in fact, it's them owning your seeds/keys as well. Coinomi going closed-source means anything could happen behind the scenes - including the collection of your seed.

[plast555]

Here is a small list of None custodial:
Online and webwallets:
Blockchain.com
Bitpay.com
Coinomi.

Offline:
Desktop and Hardware Wallets
Electrum
Bitcoin-Core
Ledger

I am very sure BitPay is custodial. Coinomi went closed-source a while ago and I'm not sure how non-custodial Blockchain's wallet really is. They promise not to hold your keys, but you never really know.

Also, Ledger Live doesn't work offline.. does it? AFAIK, you have to have an active internet connection to use it - unlike Electrum and Bitcoin Core. Remember that some platforms only give you the impression of having control when, in fact, it's them owning your seeds/keys as well. Coinomi going closed-source means anything could happen behind the scenes - including the collection of your seed.

Well Bitpay itself claims to be a none custodial. see it by yourself: https://bitpay.com/wallet/
now if they are lying then I don't know.
and Coinomi has been non custodial, and I can still see in my wallet they have option to backup wallet and export private keys. I don't know what do you mean by closed source.

and Not only Ledger, every wallet requires to be connected to internet to send BTC. can we send Bitcoin without an internet using electrum?

[btc_angela]

You can check the following threads:

[1] Custodial vs. Non Custodial Wallets - "Not your keys, not your coin" Explained.
[2] Custodial vs Non Custodial vs Browser Based Wallet
[3] Custodial Exchanges vs Non-custodial exchanges

[20kevin20]

Well Bitpay itself claims to be a none custodial. see it by yourself: https://bitpay.com/wallet/
now if they are lying then I don't know.

Thanks for the link - seems like I was wrong. I can't verify myself as I have no idea how to audit a source code, but I guess it is open-source and non-custodial indeed.

and Coinomi has been non custodial, and I can still see in my wallet they have option to backup wallet and export private keys. I don't know what do you mean by closed source.

The codelines behind a software can be either open-source, closed-source or partially open-source. Open-source means you can review the codes behind a software yourself at any given time and decide whether it's safe or not. Bitcoin is open-source. Closed-source is like Windows: you have no damn idea what is going on behind the scenes, how much data Microsoft is collecting from your PC etc.

Coinomi has had its code public for a long time. They changed that recently, and made it private. In consequence, we have no more idea what happens when you're using their wallet. The code is private. If they have bad intentions, they could store your private keys/seeds now without you or anyone else knowing it.

and Not only Ledger, every wallet requires to be connected to internet to send BTC. can we send Bitcoin without an internet using electrum?

Ledger Live can only be used online AFAIK. Electrum doesn't need an internet connection to work - you only need an internet connection to broadcast the signed transaction.

[slaman29]

I might add here that custodial wallets aren't just a risk that the exchange might lock your funds or prevent you from withdrawing them, they actually very often do.

Another issue most people don't realize is that these wallets rip you off with fees. Most exchanges for example charge a flat withdrawal fee often many many times the actual fee they pay to miners. Having your own wallet lets you decide the fees you want to pay:)

[FOPL]

As the terms suggest, custodial products are products that have someone acting as a trusted party that holds something valuable on behalf of others and the other way round for non-custodial. In the context of wallets, non-custodial wallets give users access to their private keys (PK). Literally, they have full control of their funds and their PK never leaves their devices. One widely used non-custodial wallet is Atomic Wallet, It supports multiple coins and they all have distinct private keys which can be easily retrieved

[Oshosondy]

Thanks for the link - seems like I was wrong. I can't verify myself as I have no idea how to audit a source code, but I guess it is open-source and non-custodial indeed.

It is not only if a wallet says he is noncustodial that we should truly think it is a noncustodial, to me I do not count wallets that support credit cards to be custodial, or any wallet that require verification, on bitpay you will still be forced to verify, bitpay is not a noncustodial to me, they only use it to deceive people. The true noncustodial wallet up there are bitcoin core and electrum like you commeted before. Blockchian that require email and manipulate in a way you will verify through some airdrops is not truly noncustodial too, how will non custodial wallet even require for email, atrue noncustodial wallet require nothing while setting it up.

[zasad@]

The codelines behind a software can be either open-source, closed-source or partially open-source. Open-source means you can review the codes behind a software yourself at any given time and decide whether it's safe or not. Bitcoin is open-source. Closed-source is like Windows: you have no damn idea what is going on behind the scenes, how much data Microsoft is collecting from your PC etc.

Coinomi has had its code public for a long time. They changed that recently, and made it private. In consequence, we have no more idea what happens when you're using their wallet. The code is private. If they have bad intentions, they could store your private keys/seeds now without you or anyone else knowing it.

We always choose open source applications, but most people don't understand this. 999 out of 1000 users will not check open source. We still rely on reviews from other users and the opinions of reputable sources.
OP, if you want to store bitcoin in the long term, then use only the bitcoin core wallet.
Be sure to save your private keys and you will be fine.

[Ucy]

In simple terms,

Non-custodial means you fully control your wallet and funds. Your private keys and seed phrases that allows you to access the wallet are in your care.
Custodial means the wallet provider has the private keys or seed phrase. That also means they can lock you out of "your" funds at any time.

If you don't have a wallet yet, you should look for non-custodial and preferably open source like Electrum. Most recommended are hardware wallets like Trezor and Ledger. Check this guide https://bitcointalk.org/index.php?topic=1631151.0

I would add that not running a full node means you don't fully control your fund. You will still be depending on people with full nodes to use your coins. 
Full node gives people better/full control over their funds. You benefit from other important features of Bitcoin like censorship resistant, privacy/anonymity,  secure transactions, etc

[Bttzed03]

~
I would add that not running a full node means you don't fully control your fund. You will still be depending on people with full nodes to use your coins. 
Full node gives people better/full control over their funds.

Running a full node or using SPVs is another matter. Full nodes are for verifying transactions broadcasted from non-custodial/custodial wallets which then goes to a mempool. Your transaction gets confirmed if a mining full node picks it from the mempool. If in case your transaction was dropped from the mempool for reasons like low fees or invalidated by full nodes, the funds are returned to your wallet. You still have full control over them.


 

[NavI_027]

I might add here that custodial wallets aren't just a risk that the exchange might lock your funds or prevent you from withdrawing them, they actually very often do.

Sorry dude but I barely agree. I don't know what wallet you are using but so far I don't encounter major problems with the custodial wallet I'm using right now. Small maintenances are happening but not often and besides they are fast to get resolved. Despite of the cons of such type of wallet, I'm still using it because I feel that it offers more convenience for me.

Another issue most people don't realize is that these wallets rip you off with fees.

In this part, I will agree to you . If I sum up all the fees I paid then I may consider it a significant amount. But on the brighter side, it becomes okay for me somehow since I can get my order few minutes after I cashed out. You know, greater fee means faster transaction.  

[momchilandonov]

Non custodial is when you really have your money and only you store them. Custodial means that somebody store your money for you. I always recommend to use only first types of wallets. Exodus, ownr wallet, coinomi, etc

[joniboini]

But on the brighter side, it becomes okay for me somehow since I can get my order few minutes after I cashed out. You know, greater fee means faster transaction.  

What kind of custodial wallets you are using right now? If convenience is your priority I think there are several non-custodial wallets that you use on mobile phones such as Samourai or others. I can agree that a greater fee can lead to faster confirmation but having no control of your seed/private key is just a no for me.

[20kevin20]

We always choose open source applications, but most people don't understand this. 999 out of 1000 users will not check open source. We still rely on reviews from other users and the opinions of reputable sources.
OP, if you want to store bitcoin in the long term, then use only the bitcoin core wallet.
Be sure to save your private keys and you will be fine.

I choose open source apps because I know other people can review it. If anyone is paranoid and wants to check the code, they can just learn the necessary language and do it themselves. You don't need to rely on someone else to trust a software.