The concept of ownership and control over digital assets is a crucial principle in the fast-growing cryptocurrency ecosystem. This notion can be seen through the adoption of non-custodial wallets, which provide users with complete control over their cash. Non-custodial wallets, instead of custodial wallets, let users manage their transactions independently.
Subsequently, we'll see three important considerations that can guide your decision-making process.
What is a Non-Custodial Wallet?
A non-custodial wallet, also known as a self-custody wallet, is one in which the crypto owner is entirely responsible for handling their funds. The user controls their crypto holdings, manages their private key, and handles all transactions.Non-custodial wallets put power in the hands of the user by allowing them to retain full ownership of their private keys.
With a non-custodial wallet, you, and only you, have control over these keys, reducing the risk of unauthorized access or loss due to third-party vulnerabilities. Many online wallets, like Cwallet, provide non-custodial wallet options for their users.
Three Things To Know Before Choosing a Non-Custodial Wallet
Before you embark on your crypto journey, it's essential to recognize that cryptocurrencies' decentralized nature means there's no central authority to turn to in case of loss or error. This places the onus squarely on the user to make informed decisions when selecting a non-custodial wallet. Your wallet choice can have profound implications for the security, accessibility, and convenience of your digital assets.
Understanding the major differences between non-custodial and custodial wallets will empower you to protect your investments, expedite your transactions, and fully reap the benefits of the decentralized financial landscape.
One of the fundamental aspects to understand when choosing a non-custodial wallet is the concept of private keys. Private keys are at the heart of your wallet's security, providing you with control over your digital assets. Private keys are similar to a password to your non-custodial wallet that is mathematically linked to your cryptocurrency alley and acts as a digital signature for every transaction you initiate, without which access to your wallet becomes impossible.
Ideally, private keys should be in your exclusive possession and control as it is the sole means by which you can sign transactions, move funds, and access your cryptocurrency holdings. It's important to note that private keys are not stored on the blockchain or servers; they are exclusively in your control.
Unlike custodial wallets, where a third party holds your keys on your behalf, non-custodial wallets ensure you maintain full ownership of your private keys. This control comes with security advantages, where the risk of hacking and unauthorized access is significantly reduced; ownership, where you do not need to rely on a third party to manage your assets; and privacy because your transactions remain confidential.
However, the downside of choosing a non-Custodial wallet, despite its advantages, is that in the case where a third party has access to your crypto funds, you would be solely responsible for all losses incurred. We advise beginners new to cryptocurrency who want to avoid risking their assets to choose custodial wallets with Cwallet and take that responsibility from them.
Backup and Recovery Process
When you choose a non-custodial wallet, you are solely responsible for backup and recovery. Once you have access to your private keys, you can either manually back them up by writing them down or store them digitally on an external device.
Whatever you choose, the responsibility is on you, and in the case of illegal or fraudulent access to your keys, you would have to bear sole responsibility for it. Here are some of the most popular and effective backup methods for securing your crypto assets;
1. Hardware Backup: These physical devices are designed to generate and store your private keys offline, ensuring they never come into contact with the internet. Through this air-gapped environment, hardware wallets significantly reduce the risk of cyberattacks and hacking attempts.
2. Getting it on Paper: This offline backup method involves generating your wallet's private key and public address and printing them on paper. While paper wallets can be physically stored away from online threats, they require careful handling to prevent loss, damage, or unauthorized access.
3. Encrypted USB Drives: Storing encrypted backups on USB drives is another alternative. Encrypting the wallet information before saving it to the drive adds an extra layer of security. So, in case of a device failure, loss, or theft, having a secure backup allows you to regain access to your funds.
Additionally, the seed phrase, also known as the recovery phrase or mnemonic phrase, is a string of words generated by your non-custodial wallet during its setup. This sequence is a master key to restore your wallet and access your funds in emergencies.
No Third-Party Involved
Knowing that no third party is involved is a fundamental aspect of non-custodial wallets. Non-custodial wallets are designed to provide users with complete control over their digital assets and transactions without the need for intermediaries or third-party entities.
As the wallet holder, you have full ownership and control over your private keys and digital assets. Once the wallets generate the keys, the user must store them himself. Since third-party entities are not involved, the user is solely responsible for securing their private keys, backing up their wallet information, and executing their transactions. This level of control offers security and privacy. It's important to note that while the absence of third parties provides significant control and autonomy, it also places the onus of security entirely on the wallet holder.
How To Set Up A Non-Custodial Wallet With Cwallet
Setting up a non-custodial wallet is as easy as 1,2,3!
All you need to do is to Download and install Cwallet on your device. Upon launching it, you'd be presented with the Custodial wallet option by default, from where you can switch to the Non-custodial wallet with a single button switch, as shown below.
Then from the Non-custodial wallet, you can create a new wallet; you'd be given a secret recovery phrase to secure your private keys, which you can back up, and then your new wallet is set to use.
Cwallet custodial and non-custodial wallet options fully support ERC-20, BEP-20, Layer2, Solana tokens, and 800+ tokens. You can also view live charts and transaction records in a friendly design.
Now that you know
It certainly is great if you choose a non-custodial wallet as your wallet option. However, if you would prefer to be relieved of all the responsibilities of owning a non-custodial wallet, you can simply opt for the custodial wallet option, and simply create an account with Email, Apple ID, or even Social profiles like Twitter, Telegram and Discord!
Your journey to secure cryptocurrency ownership starts by registering with Cwallet now!