Decentralized wallets are digital wallets that give users complete control over their cryptocurrencies by allowing them to hold and manage their private keys. This means that the users themselves are responsible for securing their funds, rather than relying on a third party. Decentralized wallets are often called non-custodial wallets because the control and custody of the assets remain solely with the owner. Examples of decentralized wallets include hardware wallets like Ledger and Trezor, as well as software wallets like MetaMask and Trust Wallet.

Centralized wallets, on the other hand, are managed by a third-party service provider, such as an exchange or a custodial service. In these wallets, the provider holds the private keys on behalf of the user, and users interact with their funds through the service's platform. Examples include wallets provided by exchanges like Coinbase and Binance. While centralized wallets offer convenience and user-friendly interfaces, they come with risks, as users must trust the service provider to secure their funds. If the provider experiences a security breach, users' assets may be at risk.

The key difference between decentralized and centralized wallets lies in the control and security of private keys. Decentralized wallets offer greater autonomy and security, as users retain control of their keys, whereas centralized wallets trade off some security for ease of use and convenience.