6 Reasons to Use a Non-Custodial Cryptocurrency Wallet
When thinking about investing in the crypto world, the first thing a rookie has to select carefully is a wallet. A crypto wallet is a software or hardware platform designed with the sole purpose of holding the private key to your funds. Selection of a wallet is a task that involves consideration of different variables, including technology, security, speed, reliability, and efficiency.
There are two types of crypto wallets, custodial and non-custodial wallets. The former requires a third party to hold the private keys of the account. However, in the latter, all account details, including address, mnemonic passphrase, etc., remain with you, the account owner.
Non-custodial wallets out-do their peers in almost every important aspect. Here are the top 6 reasons why you should use a non-custodial crypto wallet.
Get Full Control Over Your Funds
The first challenge that all users of custodial wallets face is divided ownership and control. Since custodial wallets act as the third party owners to your mnemonic passphrase and private keys, they largely control how, when, and when you use your wallet funds.
You must get third-party clearance before completing any deposit, trade, or withdrawal; thus, you are not at all in control over your funds. In non-custodial wallets, however, things are different.
As a user of these non-custodial, you control your wallet and can access your funds 24/7. You don’t need to entrust your private wallet details to any third party; instead, you are the sole owner of these details. Only by using non-custodial wallets when trading crypto will you achieve financial independence.
Top Security for Funds
Using custodial wallets, you expose yourself to many security threats. First, the platforms use the hot and cold wallet types to store your keys. Hot wallets are especially prone to hacks since they are available online. Although cold wallets offer some security, they are still stored in computing devices, making it easy to hack them.
Another risk in custodial wallets is the risk of freezing your assets due to KYC requirements. Using a custodial wallet, therefore, you can never be sure of your asset’s safety.
The safety of non-custodial wallets, however, depends solely on you. You are not compelled to share the details with anyone else; therefore, your account shall always remain safe.
Additionally, the seizure of your assets in a non-custodial wallet is next to impossible. No one has your account details; thus, not even the government can get access to your assets.
You Can Instantly Withdraw your Funds
Custodial wallets require the user to have third-party clearance in any transactions or withdrawal. Having restrictions on accessing your wealth may have dire impacts, especially when faced with an emergency.
In non-custodial wallets, however, things are different. You do not require long term waits to withdraw your funds. The withdrawal processes are streamlined for user convenience. Just by following the procedures set, you can withdraw your funds 24/7 in case of a crisis.
To access anything in a custodial wallet, you must log on to the internet. You cannot complete any transaction or get any account details without login in and requesting a third party’s assistance. Such attributes make custodial wallets highly inconvenient.
In non-custodial wallets, however, everything is effortless. Even without internet access, you can still use the platform and view your balances in real-time.
Best for Long Term Investments
Due to the issues surrounding custodial wallets, they are in the future going to be less useful. More people distrust custodial wallets because of their insecurity and lacking long-term dependability.
However, non-custodial wallets have proven to be useful tools for storing funds in the long run. Large scale and long-term investors prefer using non-custodial wallets because of their reliability for long term needs.
There is a possibility that custodial wallets will run out of business soon, and non-custodial wallets will continue thriving in the long-run.
A hard fork is a change in a blockchain or cryptocurrency leading to the splitting of the blockchain or currency. The Bitcoin cash splitting to create BCH and BSV is a good example. Users of custodial wallets lacked access to their funds during the fork period.
However, things were quite different for everyone who was using non-custodial wallets. They all could easily access their funds during and after the fork. Therefore, non-custodial wallets are suitable in cases of forks; they will ensure you do not lose access to your funds.
The case for non-custodial wallets depends on whether it solves all the issues clouding its opposite, custodial wallets. Non-custodial wallets leave the account owner full control over their account, thus offering them convenience when depositing, withdrawing, or trading.
Having full control also helps strengthen the security of your account against hackers or fraudulent persons. Non-custodial wallets are easily accessible, even offline, unlike their peers. Moreover, they are reliable even in times of forks.
The reliability of the non-custodial wallets in different situations makes them the best wallets in the crypto market. Examples of these wallets include Ledger Nano X, Exodus, Trezor One, and Electron. Any person interested in investing in the crypto space should choose one of the aforementioned wallets to store their crypto assets.