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Hosted Wallet

Hosted wallets are digital cryptocurrency wallets provided by trusted third parties that keep users’ private keys and funds safe. These third parties are usually cryptocurrency exchanges. Coinbase and Binance are two well-known examples. Hosted wallets share similarities with centralized banking applications because they leverage two-factor authentication and password recovery. They are also custodial, meaning that users don’t retain control of their private keys. Less experienced traders often choose them as they are easy to set up and use. In addition, traders who regularly operate on centralized exchanges may opt for hosted wallets.