Custodial wallets are those where private keys are managed by a third party (a custodian) on your behalf.

Advantages of custodial wallets:

• If you lose or forget the key, access can be restored through the custodian.
• While the blockchain doesn't provide a transaction cancellation procedure, reliable services may offer compensation for erroneous fund transfers through insurance.
• No transaction fees, with additional services insight of exchange systems providing custodial storage services.

Disadvantages:

• Limited access to your funds.
• Inability to manage assets during technical service work.
• Vulnerability to hacking; historical instances are not uncommon.
• Risk of permanent fund loss if the crypto exchange is closed by court order, authorities, or any other reason.

Non-custodial wallets give you complete control over your funds, as the private keys are stored with you and linked to your public address.

Main advantages:

• Exclusive access to the private key.
• Full control of funds and transactions.
• Ability to make transactions at any time.
• Non-custodial wallets are typically cold storage, limiting hackers' ability to attack.

The main drawback is that losing the private key and/or mnemonic phrase (seed phrase) makes accessing the assets impossible.

Hot Wallets are constantly connected to the internet, available as mobile, desktop, or browser-based options. They allow instant buying or selling of coins and tokens without additional settings.

Advantages of hot wallets:

• Fast transactions.
• Support for a wide range of cryptocurrencies.
• Ideal for new miners with smaller sums of money.

Cold Storage refers to wallets without a constant internet connection. Network connection occurs only briefly during actual transactions, ensuring offline storage of currency under the protection of a secure personal key.

Advantages of cold wallets:

• Ability to create backup copies.
• Maximum protection against hackers.
• Suitable for storing large amounts.