Question 1

What is the difference between a custodial and a non-custodial wallet?

Accepted Answer

In a custodial wallet, the provider owns your private keys, giving you access to your funds via a web portal or mobile application. Non-custodial wallets store users' private keys on devices used by users themselves. That way, users retain full control over their funds, but that's also where security concerns emerge. Losing a seed phrase leads to irreversible loss of funds stored in the wallet.

Question 2

What is a seed phrase and how should I store it?

Accepted Answer

The sequence of 12 or 24 words generated when creating a non-custodial wallet serves as its master key. Having a seed phrase, an intruder can access a user's wallet even after changing the password or losing the device used previously. Thus, it's recommended to write down the seed phrase on paper and store it in two secure places. Hardware-engraved metal backups are becoming increasingly popular for long-term storage.

Question 3

What is a hot wallet and a cold wallet?

Accepted Answer

Hot wallets are connected to the Internet, making them vulnerable to malware. Cold wallets store private keys outside the Internet connection on hardware devices or even written down. This allows keeping funds offline and securing them from intruders. That's why it's recommended to use cold wallets as storage for unused funds.

Question 4

Can someone hack my wallet?

Accepted Answer

Non-custodial wallets are extremely secure in regards to hacking attempts. However, phishing websites and malware programs that capture clipboard content make users prone to losing their funds. Thus, using hardware wallets, downloading legitimate versions of wallets from their creators, and never entering seed phrases on any website makes such loss practically impossible.

Question 5

What happens if I lose my wallet?

Accepted Answer

Nothing, provided that the user has their seed phrase. Crypto wallets don't store funds directly but rather allow users to control them using seed phrases. By entering a seed phrase in another wallet app on a different device, users can fully restore their funds. Hence, writing down the seed phrase is a critical step in working with crypto assets.

Question 6

Do I need a separate wallet for every coin?

Accepted Answer

No, because there is such a thing as multi-chain wallets. They enable using several networks (Ethereum, Cardano, Solana, etc.) via a single interface and seed phrase. However, some wallets aren't compatible with token standards used in particular coins (ERC-20, TRC-20, BEP-20, SPL, and so on). Thus, you may need to use some wallets designed specifically for a particular chain.

Question 7

What is the need for Web3 wallet integration?

Accepted Answer

It's required for decentralized applications that need a user's wallet to access their functionality. In case you only store your funds as savings, there's no need to integrate a wallet with Web3. However, if you're interacting with decentralized finance or participating in NFT markets and blockchain games, integrating wallets with Web3 becomes essential.

Launched
2015	2014
Languages
en	en, fr, de, es, ru, zh, ja, ko
Integrations or api
Limited	Ledger Live API
Supported countries
Global	Global
Community size
5M+	3M+

Top Companies

Blog

Compare Exodus vs OpenLedger

Live markets

Exodus vs OpenLedger: Which Wallet Should I Use?

Custodial Wallet or Non-Custodial Wallet?

Supported Blockchains and Coins

Security Protocols & Methods

Web3 and Decentralized Apps Support

Conclusion

Frequently Asked Questions