Custody
In a custodial service, a provider controls or manages the keys needed to access certain assets on the user’s behalf.
Self-custody
With self-custody, the person manages their own keys. This removes some third-party dependencies but increases responsibility for backups and security.
Different risks
The models do not eliminate risk; they distribute it differently. Custodial services depend on organizational controls, while self-custody depends more heavily on secure credential management.
Why it is a basic concept
Understanding who controls the keys helps explain how wallets, exchanges and other ecosystem applications work.