Glossary › Core & Fundamentals › Custodial
Core & Fundamentals Beginner

Custodial

Definition

A service where a third party holds your private keys — like crypto exchanges. Convenient but requires trusting the custodian. The crypto maxim: 'not your keys, not your coins.'

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Difficulty
Beginner
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Category
Core & Fundamentals
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See Also
8 related

◆ Key Takeaways

1

A service where a third party holds your private keys — like crypto exchanges.

2

Convenient but requires trusting the custodian.

3

The crypto maxim: 'not your keys, not your coins.'.

Why It Matters

Understanding this concept is essential for anyone entering the crypto space. It forms the foundation upon which more advanced topics like DeFi, trading, and security are built.

Related Terms in Core & Fundamentals

Bitcoin
The first and largest cryptocurrency, created in 2009 by Satoshi Nakamoto. Operates on a decentralized proof-of-work blockchain with a fixed supply of 21 million coins, serving as a digital store of value often called digital gold.
Blockchain
A distributed, immutable digital ledger recording transactions across a network of computers. Each block contains a cryptographic hash of the previous block, timestamps, and transaction data, forming an unbreakable chain enabling trustless record-keeping.
Cryptocurrency
A digital currency secured by cryptography operating on decentralized blockchain networks. Unlike fiat currencies, cryptocurrencies are not controlled by central banks, enabling peer-to-peer transactions without intermediaries.
Altcoin
Any cryptocurrency other than Bitcoin. Includes Ethereum, Solana, Cardano, and thousands of other tokens with varying features, use cases, and consensus mechanisms.
Satoshi
The smallest unit of Bitcoin, equal to 0.00000001 BTC. Named after Bitcoin's creator Satoshi Nakamoto, sats are the practical denomination as BTC's price increases.
Block
A container of verified transaction data in a blockchain. Includes a header with metadata (timestamp, nonce, previous hash) and a body with transactions. Once validated, blocks are permanently added to the chain.
Node
A computer maintaining a copy of a blockchain ledger, validating transactions, and relaying data. Full nodes store the complete history, light nodes only headers. Nodes are the backbone of network decentralization.
Peer-to-Peer (P2P)
A decentralized network where participants interact directly without a central server. In crypto, P2P enables direct user-to-user transactions resistant to censorship and single points of failure.

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Trading & Markets DeFi Technology & Protocol Security & Privacy NFTs & Gaming Regulation & Legal Mining & Consensus

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