Crypto Wallet

An EOA is what a user needs to manage their funds, send transactions, and identify themselves on the Ethereum network. The only thing a user must own to control the EOA is a private key, which serves two purposes:

• It is how the account address is derived.

• It is how transactions will be signed.

In practice, interaction between a non-developer user and the blockchain is allowed by a digital wallet. Despite the name, wallets do not store the currency (the balance is always on-chain) but instead are a tool through which users have a “window” to the blockchain (to view their balance and transaction history) and sign transactions with the private key.

The principal distinctions among wallets are:

• Who controls the private keys.

• If there is an internet connection.

Next, let’s discuss the categorizations of wallets and the types of wallets based on these characteristics.

Custodial vs. non-custodial wallets

Custodial wallets are wallets where the service provider (usually an exchange or a company) stores the private keys on behalf of the user. The user does not have direct control over the private keys, which means that the user is trusting the service provider to keep their funds safe. Non-custodial wallets are wallets where the user holds the private keys. This means that the user has direct control over the private keys and is responsible for the security of their funds. 

Custodia ...