Non-custodial and custodial refer to different approaches in managing assets,

particularly in the context of blockchain and cryptocurrency. These terms are commonly
used in discussions about wallets, exchanges, and other platforms that deal with digital
assets.

​ Non-Custodial: A non-custodial approach gives users complete control over their

assets. In the context of blockchain and cryptocurrency, a non-custodial wallet or
platform means that the user holds the private keys to their wallets themselves.
Private keys are crucial cryptographic codes that grant access to the funds
associated with a particular wallet address. With a non-custodial wallet, the user
is solely responsible for the security of their private keys and the management of
their assets. If a user loses their private keys, they typically lose access to their
funds permanently. Examples of non-custodial wallets include hardware wallets,
software wallets where you control the private keys, and some decentralized
applications (DApps) that allow users to interact with blockchain directly.
​ Custodial: A custodial approach involves a third party, such as an exchange or a
service provider, holding and managing the user's assets on their behalf. In this
case, the user doesn't directly control their private keys. Instead, they create an
account on the platform, and the platform generates and manages the private
keys for them. While this can make things more convenient for users, it also
means they are dependent on the custodial service's security practices. If the
custodial platform experiences a security breach or goes out of business, the
users' funds could be at risk. Examples of custodial platforms include centralized
exchanges like Coinbase, where users create accounts and trade without needing
to handle private keys directly.

In summary, the main difference between non-custodial and custodial in the context of
blockchain is the control over private keys and the level of responsibility for securing
assets. Non-custodial solutions prioritize user control and decentralization, while
custodial solutions offer convenience but potentially come with higher security risks
due to reliance on third-party services.