Are you new to cryptocurrency and wondering what a non-custodial wallet is? Or are you an experienced investor looking for more information on non-custodial wallets? How is it different from your wallet in Centralize exchanges like Binance, Huobi, or Bitget? This article will cover everything you need to know about non-custodial wallets.
What is a cryptocurrency wallet?
Before diving into non-custodial wallets, it’s important to understand what a wallet is in cryptocurrency. A wallet is a software application or hardware device that is used to store, manage, and transfer cryptocurrency. In other words, it’s where you keep your digital assets.
What is a non-custodial wallet?
A non-custodial wallet, also known as an off-exchange wallet, is a type of cryptocurrency wallet that allows users to have full control over their Private Keys or Passphrase associated with their wallet instead of delegating them to a third party, such as exchanges.
Simply put, when a user owns a non-custodial wallet, no one (including the wallet provider) has the authority to freeze, access, or transact the user’s assets except for the user themselves. Non-custodial wallets offer advantages in terms of security and safety for users because they help prevent risks associated with storing assets with a third party.
You can restore your non-custodial wallet on any decentralized wallet platform using the following Key information:
- Passphrase (Mnemonic Seed): Consists of 12 to 24 English keywords.
- Private Key: A character string in letter and number format is also stored on the user’s device.
These two pieces of information are encoded and stored in a secure area on the mobile device that only the user can access. This information is extremely important, so after creating a non-custodial wallet, users need to store it carefully for backup or wallet recovery in future use cases.
Non-custodial wallets only provide users an interface to interact directly with on-chain assets stored on the Blockchain.
Compare Custodial and Non-custodial Wallet
| Custodial service | Non-custodial service | |
| Private Key | Third-party ownership | Ownership of wallet holder |
| Accessibility | Registered account | Anyone can access |
| Transaction Costs | Usually higher | Usually lower (network fees only) |
| Security | Lower (information can be hacked unless third parties have strong security measures in place) | Higher (user controlled information, unless you share it with others) |
| Support | Usually higher | Usually lower |
| KYC requirements | Yes | No |
Why do you need a non-custodial wallet?
As the popularity of cryptocurrencies continues to rise, choosing a safe wallet to store your digital assets becomes increasingly important. Non-custodial wallets are becoming the preferred choice for many users due to their security and control.
- Full control of assets: This is the greatest advantage of using a non-custodial wallet. In other words, your assets are truly yours, and you can be your own bank.
- Instant use: Non-custodial transactions tend to be faster as you don’t have to wait for withdrawal approval. All transactions are carried out on the non-custodial wallet almost instantly and confirmed by the user. Finally, there is no supervision, so you don’t have to pay additional supervision fees, which can be expensive depending on the service provider you choose.
- More secure: The risk of information theft while using a non-custodial wallet is very low. You don’t need to provide personal information or KYC (Know Your Customer) to anyone. Everything is traded based on your wallet address (Public Key).
- Compatibility: Non-custodial wallets are usually compatible with many types of cryptocurrencies on different blockchains, meaning you can store and manage different types of cryptocurrencies in one wallet.
- Access: Non-custodial wallets play the most important “gateway” role for you to interact with decentralized applications (Dapps).
Security Considerations for Non-Custodial Wallets
Although non-custodial wallets do not require you to trust a third party, they require you to trust yourself to keep your key and wallet safe. If you lose your wallet, destroy it, or forget your password and do not take preventative measures to be able to recreate your wallet, you may lose access to your money.
As with any online service, ensuring the security of your information and assets is your responsibility.
Some tips to ensure the security of your non-custodial wallet include:
- Use a safe and reliable non-custodial wallet that has been tested and verified. Never share your private key or seed phrase with anyone.
- Store your private key or seed phrase in a secure, offline location.
- Verify every transaction you sign and only connect your wallet to websites/apps you trust
- Always double-check your wallet address when making transactions, and avoid downloading software or apps from unclear sources.
Top Non-Custodial Wallets Available
Currently, there are many different providers of cryptocurrency wallets to choose from. All of them have their own unique features. Consider using some of the popular non-custodial wallets available today, such as Metamask, Trust Wallet, SafePal… or experience our Rabbit wallet.
Rabbit wallet is built to become a new generation multi-functional decentralized wallet application. And it is designed to provide users with an excellent experience, a simple and intuitive interface, and friendly to all types of users. Utilities are built to bring everything users need in one place, including:
- Store assets using private keys to ensure high security and credibility.
- Easy access, anonymous transactions anytime, anywhere.
- Trade over 1,000,000 tokens from more than 14 different leading blockchains.
- Automatically convert preferred blockchains without manual input.
- Connect with many DApps.
- Passive earning through Staking.
- Daily news and market strategies.
- Track charts and prices of each token in real time.
- Participate in Airdrop and IDO from leading projects.
- Buy tokens directly via Visa and MasterCard.
- Rewards from referral programs.
Conclusion
In summary, a non-custodial wallet is a type of cryptocurrency wallet where you have complete control over your private keys and manage your cryptocurrency yourself. While non-custodial wallets offer greater security and control, they may also be more difficult to use and require more responsibility.