Coinbase vs. PayPal: Which Is Right for You? | The Motley Fool

There are various different types of crypto wallets. The most common type is a custodial wallet, which is when you leave your crypto on the exchange where you bought it. This option is popular because it means investors don’t need to worry about lost passwords or understanding crypto storage. However, it can bring additional risks — particularly if your exchange fails or gets hacked. As a result, many long-term investors prefer to move their digital assets to a non-custodial wallet that they control.

The Coinbase Wallet is a standalone app, so you can use it even if you’re not a Coinbase customer. It is easy to connect the Coinbase Wallet to your Coinbase account. One thing to watch out for is that the wallet may not support all the tokens you can buy on the exchange.

In June, PayPal launched limited wallet functionality for U.S. customers. It gives customers a lot more flexibility in how they manage their digital assets, including moving crypto to external addresses and sending it to friends and family, without fees. It isn’t a full wallet, but it does mean U.S. customers can withdraw assets without first converting them into dollars.

PayPal also has a Checkout with Crypto function, which lets you use your cryptocurrency assets to pay with certain merchants. PayPal will convert your crypto into a fiat currency such as dollars to make the payment.