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How to Choose the Best Non Custodial Wallet

Feb 22, 2024

What Is a Non-Custodial Crypto Wallet?

Self-custody, or non-custodial, wallets are the cryptocurrency wallets that give users exclusive control over the private keys. The staff of non-custodial wallets doesn’t have access to private keys, nor can they entrust storage of these keys to a third party. No one except for the wallet owner has access to the keys. If you are using a non-custodial wallet, you are the only person responsible for safety of funds stored in the wallet.

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Non-custodial wallets are censorship-free and direct, as users contact with their crypto through the pair of private and public keys on their own. Non-custodial wallets are distinguished from custodial wallets – platforms that store and manage crypto on behalf of the money owners who never access their private keys.

A significant part of the crypto community discourages the use of custodial wallets by saying “not your keys, not your coins.” They are afraid that the wallet staff may suddenly block the user from managing his or her money or the crypto funds can be stolen in the event of the wallet server’s hack.

Types of Non-Custodial Wallets

We can point out three general types of non-custodial wallets:

Software wallets. These wallets are the apps that can be accessed via a mobile device, computer, or through a web browser. These wallets are connected to the Internet, so they can be considered “hot wallets.”

As such wallets can be accessed by hackers from a distance, it is recommended not to hold much money on them. They are good for routine spending, but not for long-term storage of large amounts. Freewallet, MetaMask, or Trust Wallet are the notable examples of this type of non-custodial wallets.

Hardware wallets. These wallets are offline physical devices storing private keys. They can be connected to computers via USB to perform transactions. For the rest of the time, they are fully safe from hackers. To get one, you need to order it from a manufacturer. Buying a second hand hardware wallet is not safe.

Hardware wallets are often considered the most secure wallets. If you don’t lose the device itself and don’t forget a PIN and a seed phrase needed to access the funds, your funds will be safe. On the other hand, such wallets are unfit for frequent transactions. The most popular hardware wallets are Ledger and Trezor.

Paper wallets. This is the basic old-school crypto wallet. You just print or write down the wallet address and the private key on the piece of paper and keep it until you need to perform a transaction. Alternatively, you can print a QR code with the pair of keys. These wallets are offline.

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If you manage to keep the paper safe, such a wallet will be a secure storage for your private keys.

Pros and Cons of Non-Custodial Wallets

While talking about pros and cons of non-custodial wallets, we will talk about their advantages and disadvantages over the custodial ones which, all in all, are still in demand.

Pros

Safety of personal data. Unlike custodial wallets, self-custody wallets don’t collect users’ personal data. Сustodial wallets by contrast require users to undergo a KYC procedure. It creates the data leak risk.

No centralization-related risks. As you are the only owner of private keys associated with your crypto public address, no one can block or steal your tokens as long as you control your keys. That’s something custodial wallets can’t boast. If the custodial wallet you use turns out to be a scam or the team behind the wallet lacks professionalism, you can lose your money or simply be unable to use it when you need it.

DeFi connectivity. Non-custodial wallets are DeFi-ready. Using them you can effortlessly connect to DeFi platforms, use dApps, and access multiple blockchains.

Cons

Less intuitive than custodial wallets. Some find self-custody wallets a bit more complex for newbies. However, the differences in interface are not that dramatic and with time everyone can get over it.

No backup. Considering that non-custodial wallets don’t use KYC, you bear the full responsibility for the safety of your funds in the wallet. If you forget your seed phrase, the app will treat you as anyone who can’t provide the correct seed phrase, the one who doesn’t own the funds. Keeping your seed phrase and PIN is crucial. If you fail to do that, you may permanently lose your money.

Choosing a Non-Custodial Wallet

While choosing the self-custody wallet, pay attention to the following factors:

Type of wallet. Depending on the purpose of the wallet you should decide whether you need software, hardware, or paper wallet. The first type is better for holding small amounts and frequent spending. The other two are better for long-term storage of large sums.

Ease of use. The wallet should have a handy interface, so you won’t lose or send your funds and data to the wrong place by mistake.

Security. Make sure that the app is strong enough to protect your data from leaks.

Versatility. The more features the wallet has, the more freedom it will give to you. The large set of supported tokens is also an advantage.

Reputation. All of the mentioned above can be learned from the unbiased user feedback. Research the wallets you find attractive and make sure they are really as good as you think. Avoid using wallets with dubious reputation.

How to Secure Your Non-Custodial Wallet

It’s better to turn on as many security features as possible. The set of features may vary depending on the wallet you choose. Some apps are protected with biometrics, the PIN is usually a must, the seed phrase should be printed or written down and kept in the safe place. Most of the work is done on the wallet developers side, like data encryption, etc.

Non-Custodial Wallets and Decentralized Finance (DeFi)

Decentralized Finance, or DeFi, is a modern blockchain-leaning segment of the global economy. The DeFi sphere provides a wide array of platforms offering users various ways to capitalize on holding, spending, and trading cryptocurrencies. These platforms are decentralized and mostly self-managed via smart contracts.

As DeFi platforms deal with numerous blockchains, self-custody wallets are the must as they deal with blockchains directly and users need them to access the DeFi platforms’ services.

Mobile Non-Custodial Wallets: Convenience on the Go

Mobile wallets are usually the hot wallets, the ones connected to the Internet and better fit for small sums and frequent transactions. If you do enough to protect your wallet from thieves and don’t compromise your wallet credentials, the mobile self-custody wallet will serve you well. Happily, there are many options on the self-custody wallet apps market, so you can find the one that meets most of your requirements.

Non-Custodial Wallets for NFTs

Most NFTs are built on top of the Ethereum blockchain as Ethereum is very popular and was the first network to propose NFTs. Naturally, the self-custody wallets supporting Ethereum-based tokens (including an NFT standard called ERC-721) became the staple of NFT trading. One of the examples is MetaMask.

FRWT Self-custody Wallet

Freewallet introduced a non-custodial wallet called FRWT in 2023. This wallet is versatile and safe. It supports over 1,000 cryptocurrencies built on top of 15 blockchains. FRWT is compatible with custom blockchains as well.

The wallet provides several on-ramp methods and an instant swap service. The wallet is protected via data encryption. On the user side the app is secured with a seed phrase, a PIN, and optional sign in via biometrics.

Conclusion

There are not many factors to consider while choosing a self-custody wallet. It should have a good reputation, it should be easy in use, support all the needed tokens, and offer all the needed features. Thankfully, there are many reviews over the Internet about most of the respected brands, so you will probably find what you need after dedicating some time to research.