Custodial wallets vs. non-custodial wallets
Unlike traditional assets, crypto enables its users to “custody” (or control) their own funds. This is made possible by private keys, a secret number that denotes ownership of a specific asset.
In the case of custodial wallets, a third party manages the private key. With a non-custodial wallet, the user retains this control. This distinction comes up in the popular crypto community phrase: “Not your keys, not your crypto.”
The Blockchain.com Wallet’s Private Key account is a prime example of a non-custodial wallet.
Contrast this with a custodial product such as Blockchain.com’s Exchange account. While you make trades on the Exchange, Blockchain.com custodies those funds. The same applies to the Trading or Rewards accounts within your Blockchain.com Wallet.
In these cases, you are entrusting that company to safeguard (custody) your assets, meaning you do not have 100% control of your crypto.
Why does this matter?
Most crypto wallets are custodial. If a custodial platform suffers a security breach, user funds may be at risk.
At Blockchain.com, the likelihood of this type of event is extremely low due to the military-grade security and industry-leading safeguards we apply.
What can I do?
You should do everything you can to proactively protect your funds, such as ensuring you have a secure password that you don’t use elsewhere and two-factor login authentication.
Is the Blockchain.com Wallet custodial?
Your Private Key accounts within the Wallet are non-custodial whereas Trading accounts are custodial.
It is important to note that your trading account on Blockchain Exchange and your Blockchain Wallet have separate login credentials. This also means trading accounts are not backed up by the 12-word backup phrase of any wallets you have created. Instead, your custodial account on Blockchain Exchange has a password recovery flow.
Can I connect my Blockchain.com trading account to my Blockchain.com Wallet?
For convenience, and to encourage our users to promote best practices for security, we have enabled a link between your trading account and your Blockchain Wallet. This will allow you to deposit funds to The Exchange from your Blockchain Wallet and withdraw assets to your non-custodial Blockchain Wallet at the end of your trading session for safekeeping.