How safe is a custodial wallet to a hardware wallet - page 2.

Coin_trader

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Quote from: Edcrypto91 on April 07, 2023, 02:27:11 AM

I recently purchased some Bitcoins butAccording to most posts and replies on this forum it seem the best way to hodl Bitcoin is to use a hardware wallet as long as you can keep it safe.
Well is the hard ware wallet better than a custodial wallet??

Hardware wallet is the best if you don’t want to worry much about your asset as a beginner because your private key won’t leave your hardware wallet every time you use it unlike custodial wallet that you don’t have access to your private key.

Electrum and other non-custodial open source wallet are the alternative option if you can’t afford to invest hardware wallet during your initial investment journey on crypto. Actually most reputable member here start on these wallet since hardware wallet doesn’t exist when we are all newbie on crypto. It’s just hardware wallet make life of newbie easier on keeping safe their assets compared on traditional non-custodial wallet that keep you importing private key or seed phrase whenever you will access your wallet on different device.

KiaKia

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Custodial wallets are red flags, they can decide to close down one day and walk away with customers' funds since they are the ones holding the private key of every customers wallet, custodial wallet are the wallets that require you to log into the platform and deposit your assets, all you need to use is an email account and your password, when you see such crypto wallet, run.

Many people have lost a good amount of BTC, DogeCoin, and LTC to free wallets, till this day I doubt that they paid a soul back, instead they even deny that they did such things, with many proofs against them.

If you want the safest crypto wallet for Bitcoin, buy a hardware wallet.

Smack That Ace

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Quote from: hZti on April 07, 2023, 10:25:27 AM

Software Wallets are 100% safe if they are used correctly. Bitcoin was designed to be used only with software wallets. Still hardware wallets are a good invention since they make it more easy to store your bitcoins. So if you have the money you should get one.

Not all software wallets are 100% secure, even if you use them correctly. We have custodial and non-custodial wallets, if you use a custodial wallet, it means you don't have complete control of your bitcoins, when using the custodial wallet, your bitcoins are no longer yours anymore because you don't keep private keys. But in contrast to a non-custodial wallet, you are the only one with the key to access your bitcoins, which is much more secure than a custodial wallet. Hardware wallets are non-custodial wallets.

hZti

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Software Wallets are 100% safe if they are used correctly. Bitcoin was designed to be used only with software wallets. Still hardware wallets are a good invention since they make it more easy to store your bitcoins. So if you have the money you should get one.

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Quote from: Edcrypto91 on April 07, 2023, 02:27:11 AM

I recently purchased some Bitcoins butAccording to most posts and replies on this forum it seem the best way to hodl Bitcoin is to use a hardware wallet as long as you can keep it safe.
Well is the hard ware wallet better than a custodial wallet??

Pay attention to these two points:

Choosing a hardware wallet is the wisest choice when you expect your bitcoins to be stored with the best level of security.
Hardware wallets are also the wisest choice when you want to store relatively large amounts of bitcoin.

But in my opinion, hardware wallets are ideal for users who have experience in bitcoin rather than beginners. But if you are just starting out, then I can instead recommend you choose an open source mobile or desktop wallet, and you can switch to hardware wallet as your experience in bitcoin has developed. But when it is about which is the best between hardware wallet vs custodial wallet, then hardware wallet is the best choice.

Kelvinid

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Quote from: Edcrypto91 on April 07, 2023, 02:27:11 AM

I recently purchased some Bitcoins butAccording to most posts and replies on this forum it seem the best way to hodl Bitcoin is to use a hardware wallet as long as you can keep it safe.
Well is the hard ware wallet better than a custodial wallet??

And the difference is huge...if we could rate custodial wallet (1-10) it was just 2 while hardware wallet is 9.
Hardware wallet gives us a higher level of security but the question is if the amount of your Bitcoin is worth enough to store there or something you look for another option like using Electrum wallet.

But I tell you that no matter what wallet you are using and if you are too careless, especially on links that will address you into logging your wallet account, that doesn't matter as there is a bigger chance that you will lose your funds. In fact, I was using an electrum wallet for many years and fortunately, I'd never experienced hacking.

tbct_mt2

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Quote from: Bananington on April 07, 2023, 03:40:15 AM

Quote from: tbct_mt2 on April 07, 2023, 03:31:29 AM

course, there are back doors if you buy second hand hard ware wallets from bad people.

There are many things you should not buy as fairly used or second hand, and a hardware wallet is one of them majorly, no matter how cheap.

There are alternatives for hardware wallets like cold wallets, multi-signature wallets with SPV wallet softwares like Electrum wallet. If you don't afford to buy a hardware wallet from official store, don't buy second-hand hardware wallet. You can always use alternatives which are safer and free to use.

Electrum wallet is free for download and use. If you want to use it as a cold wallet or multi-signature wallet, you only have to learn a little bit and can set up yours.

Creating a cold storage wallet in Electrum
Creating a Multi-sign wallet in Electrum

DanWalker

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When you use custodial and exchange wallets like you deposit money in a bank, you don't have full control over your assets, your assets can be frozen or locked at any time. But when using non-custodial and hardware wallets, you become your own bank, you have full control over everything, and whether your assets are safe or not is up to you to decide. Hardware wallets are the best, but if you are not ready to own them, you can also look for another solution like a non-custodial wallet, it is still more secure than a custodial wallet.

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Quote from: Edcrypto91 on April 07, 2023, 02:27:11 AM

I recently purchased some Bitcoins butAccording to most posts and replies on this forum it seem the best way to hodl Bitcoin is to use a hardware wallet as long as you can keep it safe.
Well is the hard ware wallet better than a custodial wallet??

Just for the sake of explanation custodian wallet is bank whereas the hardware or non custodial wallet is your own vault so which gives access to your money and complete control of it. When it comes to hardware its more secure because it keeps the assets safe even if we connect it to an infected device but everything comes with pros and cons so the negative side of hardware wallet is it can be damaged physically by accident, etc.

Frankolala

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Custodian wallet is controlled by someone and you are at big risk with your investment in such wallet because, this custodial wallets are vulnerable to attack. For example information of clients can easily be accessed by someone out or inside and this will be used as advantage for hackers to penetrate in it and steal all funds, or the exchange or platform can misuse your money which you entrust to them and this will lead to the crash of the platform. All your funds will be gone and there will be nothing that you can do to claim your funds. Recently Paxful exchange crashed in my country with all customers funds gone.

Noncustodial wallet is the best and keep your coin very secured from anyone to easily have access into it. With this wallet only you control and know about your funds,and you are you own bank. Don't forget bitcoin slogan that says not your keys,not your coins. Only keep funds that you can afford to lose in a custodial wallet.

Zaguru12

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Quote from: Blurr007 on April 07, 2023, 04:44:13 AM

Crucial Topic.

Custodial wallet is a type of wallet that requires a third party to takes hold of private keys on behalf of every user.
Which makes asset more secure, because only the third party and the user knows the private key.
In a case where there is missing asset, the private key must have been shared to someone outside the third party and user.

As for Hardware wallet, just misplacing it could put the user at risk, because no third party to help checkmate the security.

I think people that are too afraid to hold on to private keys by themselves and prefer custodian wallets are people that are easily comfortable with banks and exchanges having their private keys.

Losing an hardwallet doesn’t necessarily means the coins are gone forever because there’s the seed phrases that could be used to recover or generate the private key. This seed phrase could then be imported into a new hardware wallets to recover funds. To secure one’s seed phrase or private key from missing, multiple backups are required and could be stored in different locations just in case of natural emergencies.

And if at ones is afraid of security needs another human back then a family relative could even be less risky than having to trust a custodian wallets which could be face by hacks and could expose the keys to not just the hacker but multiple others

Latviand

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A custodial wallet is managed by a third party, like an exchange or wallet provider. They keep your private keys and manage your funds on your behalf. You put your trust in them to keep your assets safe, but there is always the possibility of a hack or the third party going out of business. Some custodial wallets may provide insurance or security measures, however it is critical to be aware of the risks. Hardware wallets on the other hand though, you are the one responsible for the safety of your bitcoins so if you think that you can be sure that you can secure your hardware wallet yourself, you can go that way but if not, considering a custodial wallet might be your best choice.

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Quote from: Blurr007 on April 07, 2023, 04:44:13 AM

Crucial Topic.

Custodial wallet is a type of wallet that requires a third party to takes hold of private keys on behalf of every user.
Which makes asset more secure, because only the third party and the user knows the private key.
In a case where there is missing asset, the private key must have been shared to someone outside the third party and user.

As for Hardware wallet, just misplacing it could put the user at risk, because no third party to help checkmate the security.

The bolded part of your post caught my attention. I'm not sure by what you mean by "makes it more secure".
Are you implying that using a custodial wallet makes your coin more secure or what? The fact that it's called a "private key" and not a "shared/public key" should already give you the idea that its not meant to be shared with others only the owner of the wallet should know the private key of his or her wallet.

To the Op, if you're unable to afford a hardware wallet then you can also use some reputable non-custodial wallet like Electrum, you can use it has a cold wallet and that will provide the same security as a hardware wallet.
The way you use your wallet determines how much secure your coin will be. but if you decide to be careless with your wallet even if you use the most secure hardware wallet your coin might still be stolen.

CoinEraser

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Quote from: Edcrypto91 on April 07, 2023, 02:27:11 AM

I recently purchased some Bitcoins butAccording to most posts and replies on this forum it seem the best way to hodl Bitcoin is to use a hardware wallet as long as you can keep it safe.
Well is the hard ware wallet better than a custodial wallet??

Simple answer: Yes!

The past few years have shown time and again how important it is to keep your bitcoins yourself. So many people have lost their coins because they entrusted their private keys to other people. In order to prevent this, you should always have sole control over the private keys and thus over the bitcoins. Everything else always carries a risk that you could lose the coins. Therefore you should not use a custodial wallet or leave the coins on an exchange, casino or anywhere else.

Currently you can even win a Ledger hardware wallet here in the forum. So if you don't have money for a hardware wallet, try your luck there. Wink

[FREE RAFFLE] Betnomi Cold Wallet 🦊

Outhue

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OP custodial wallets are wallets that are controlled by the developers, they work like banks, meaning if you keep 1000$ in the wallet, the developers have access to the wallet, behind your back.

There is one thing we call a private key or recovery seed, this is what you need to gain control of your wallet, no one will have access to your funds if you are in control of your private key or your recovery seed.

What you need is a Non-custodial wallet, for example Electrum, when you open this wallet and create a new account you will be given your recovery seed straight away, all you need to do is keep the recovery seed safe, do not share with anyone.

Assuming your phone gets lost one day, you can download the Electrum wallet into a new phone and import the recovery seed into the Electrum wallet, all your funds will be back again.

Recovery seed and Private key are very important for any crypto investors, keep them safe.

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Quote from: Edcrypto91 on April 07, 2023, 02:27:11 AM

I recently purchased some Bitcoins butAccording to most posts and replies on this forum it seem the best way to hodl Bitcoin is to use a hardware wallet as long as you can keep it safe.
Well is the hard ware wallet better than a custodial wallet??

What I mean by custodial wallet in simple terms is that using it means giving access to your funds to someone else.
Custodial wallets should never be used for holding and the reason why can only be understood if you look at the FTX exchanger incident.
Noncustodial hardware wallets are always best for securing your funds. First of all it is not connected to the internet so no one can easily fall into the trap of phishing or hacking. Also, since it is physical, its encryption security capabilities are stronger, so the answer to your answer is yes, of course, hardware wallets are always better than custodial wallet

Blurr007

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Crucial Topic.

Custodial wallet is a type of wallet that requires a third party to takes hold of private keys on behalf of every user.
Which makes asset more secure, because only the third party and the user knows the private key.
In a case where there is missing asset, the private key must have been shared to someone outside the third party and user.

As for Hardware wallet, just misplacing it could put the user at risk, because no third party to help checkmate the security.

Little Mouse

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Custodial wallet means someone else is taking care for the security of your bitcoin. While non custodial (hot/cold) or hardware wallet refers to take care of your bitcoin yourself. What do you think? Which one is better? When someone else is responsible for taking care of your coins, remember that you don't own the coin like they say "Not your keys, not your coins."

mk4

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See for yourself why custodial wallets are bad for long-term holding: https://chainsec.io/exchange-hacks

As for wallets in general, summary: hardware wallets > mobile non-custodial wallets > desktop non-custodial wallets > custodial wallets
If you want it more detailed: https://chainsec.io/wallets

aoluain

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One of Bitcoin's attractive features and one of the reasons why Satoshi created it was that
it enables us to take FULL CUSTODY of our money/finance/wealth. This means not having to
trust a bank to hold that money which
gives us limited access to it.

Why would anyone not spend <$100 on a hardware wallet and take full control of their
Bitcoin? There then would be no need to TRUST others to look after your Bitcoin.

Topic: How safe is a custodial wallet to a hardware wallet - page 2. (Read 363 times)