Custodial Wallet vs Cold Wallet
Custodial Wallet and Cold Wallet are easy to mix up. Here are both definitions from the HighRisk Media glossary side by side.
Comparison table
| Term | Custodial Wallet | Cold Wallet |
|---|---|---|
| Full name | — | — |
| In short | A custodial wallet is a crypto wallet whose private keys are held by a third party (an exchange or service), while the user manages funds through a login and password. | A cold wallet is a way of storing cryptocurrency in which the private keys are kept offline and not connected to the internet. It is used to protect large balances from hacking. |
| Verticals | Crypto | Crypto |
What is Custodial Wallet?
In a custodial wallet, the private key used to sign transactions is held by the provider. The user sees a balance in the interface and issues instructions, and the provider carries out transfers on the user's behalf. The term comes from the English 'custody', meaning 'storage' or 'guardianship'.
What is Cold Wallet?
A cold wallet keeps private keys off the network: on a hardware device, on paper, or on a separate computer with no internet access. Transaction signatures are generated inside the offline device, so an attacker who gains access to an online computer still cannot move funds without physical confirmation.