Buying crypto and simply storing coins is not enough, we need secure storage to keep our crypto. By default, it stores on an exchange which is not a secure way to keep your crypto, the reason is that it involves third-party access, and you have no full control over your assets, this approach is called custodial wallet or custodial storage.
Rather than a custodial approach, there is another way of storage called non-custodial storage, it is a completely decentralized and secure way to store your coins. Moreover, it gives you full access control which means you can own your keys and phrases.
Let’s have a broader view of custodial and non-custodial storage:
Custodial Vs Non-Custodial Storage
Custodial wallet is less secure than non-custodial, custodial wallets don’t give you complete access to your private key so this type of wallet can sniff your data anytime, they have full access to your account if I say they can do what they want then I would not be wrong for example Coinbase. Moreover, non-custodial wallets are fully owned by you, only you can hold the private key and phrases, for example, Atomic Wallet.
Now let’s have a broader view of Atomic Wallet also called noncustodial and Coinbase also called a custodial wallet.
Atomic Wallet Vs Coinbase Compared
Atomic Wallet is non-custodial decentralized storage, which means you can own your accounts fully like private keys and phrases fully held by you. Using this method, you can protect your account, since protecting an account also protects the crypto. The most common atomic wallets are Bitcoin, Polkadot, Solana, Cardano, BNB, Ripple, Dogecoin, Shiba Inu, and more. There are two types of atomic wallets hot wallets and cold wallets:
- Hot Wallets: Coins are kept in online wallets on a variety of internet-connected devices, such as tablets, laptops, and mobile phones. Hot wallets are online-only services; hence they are usually the target of cyberattacks. Edge Wallet, Coinbase Wallet, and MetaMask are a few examples.
- Cold Wallet: Hard discs and USB flash drives, which are frequently referred to as offline wallets since they are not linked to the internet, are where we keep bitcoins. Due to the internet's diminished connectivity, there is a lower likelihood of a cyberattack, but data is still at risk; we could lose our data due to disc corruption or key loss. As a result, we must exercise caution. Examples include backup storage methods, paper wallets, and real bitcoins.
Coinbase is an exchange-based platform where you can buy, sell or trade crypto, also known as custodial wallets. Moreover, it acts like a centralized authority like a bank. By default, it stores your crypto but it is not the secure way to keep it directly on exchanges. It involves third-party access means third parties own your private keys, moreover, they can monitor your assets anytime.
The main distinction is that atomic wallets don't achieve 100% security, however yes, it achieves more than Coinbase; The best course of action is to always store cryptocurrency in a crypto wallet.
Atomic Wallet and Coinbase are two different applications, Atomic Wallet is a place where we securely store crypto, it can be a piece of software and hardware. Moreover, Coinbase is an exchange liquidity platform where we can trade, sell, and buy crypto. The main difference between them is that atomic wallets secure crypto of course not 100% but yes sure more than Coinbase.