A non-custodial wallet is a type of cryptocurrency wallet where the user has exclusive control over their private keys and, therefore, their funds, without relying on third-party services.
Understanding Non-Custodial Wallets
Non-Custodial wallets, also known as self-custodial wallets, are crypto wallets that give you complete control over your public and private keys, and subsequently full control over your crypto wallet and assets.
What is a Non-Custodial Wallet in Crypto
Non-custodial wallets are wallets that give the owner exclusive control of the private keys rather than entrusting them to a third party, such as an exchange. With a non-custodial wallet, you are entirely responsible for securing your private keys and wallet.
In contrast to custodial wallets, non-custodial wallets are censorship-resistant; they give the owner a direct link to their blockchain address, meaning their access is not dependent on any other entity, and assets cannot be confiscated by another party.
Types of Non-Custodial Wallets
Generally, there are three types of non-custodial wallets:
- Software Non-Custodial Wallets: These wallets are a software application that you can access through a web portal, computer, or mobile device. They store your private keys within an interface that is always connected to the internet. Examples include Metamask and Trust Wallet.
- Hardware Wallets: These wallets store your private keys offline in a secure physical device. The hardware is usually a portable device you plug into your computer to access your crypto assets.
- Paper Wallets: Paper wallets store your private keys offline. It is a printed piece of paper that contains your private keys and QR codes. To access your assets, you need another crypto wallet app that can scan the QR code.
Benefits of Non-Custodial Wallets
- Complete Control of Your Wallet: You have both your private keys and recovery phrase, giving you complete control of your wallet and assets.
- Censorship-resistant: More secure than exchange wallets because private keys are not managed by a single entity.
- No limitations: Transactions are unrestricted as the freedom and responsibility of the assets are completely in your hands.