Best Noncustodial Wallets for Convenient and Secure Crypto Storage.
Cryptocurrency adoption is on the rise, and with it the vital question of how to securely store the keys that unlock access to these digital assets. While enthusiasts might point to the best noncustodial wallets for maximum security and ownership, it can be daunting for beginners to dive right in without understanding the importance of custody. For starters, cryptocurrency storage falls under two broad categories: custodial and noncustodial storage solutions.
Custodial storages are wallets that cede control of your private keys to another party. You trust a third party to keep your assets secure and give you access whenever you need to trade them or move them somewhere else, an arrangement similar to keeping your money with a bank. While custodial wallets afford you convenience and ease of usage, trusting someone else with the security of your assets does come with the risk of loss.
The safer alternative is a noncustodial wallet. This way you have sole control of your private keys and, by extension, your digital assets. But being in charge of your cryptocurrency means you are solely responsible for securing your keys and Binance staying on top of the security of your assets.
This article explores the best noncustodial wallets and the features that earn them that honor.
What Is a Noncustodial Wallet?
A noncustodial wallet allows you to own and crypto control the private keys to your cryptocurrency. This gives you full access to your funds.
The underlying principle is that users control the private keys to their accounts. The noncustodial wallet provider shouldn’t have any access to the keys, and therefore can’t freeze or manage your assets in any way. For clarification, wallets don’t actually store cryptocurrencies. They merely hold the private and public keys, and provide users an interface to interact with their digital assets, which are decentrally kept on the public ledger or blockchain.
This leads to the question: Why use a noncustodial wallet?
While allowing a third party to manage and secure your cryptocurrencies is convenient, giving up control can create susceptibility to exit scams, hacking and theft.
Consider the instructive story of Mt. Gox, a leading Bitcoin exchange that filed for bankruptcy in February 2014. Mt. Gox announced that about 850,000 bitcoins belonging to customers and the company — valued at approximately $450 million then — were missing. A security audit revealed that the missing Bitcoins were stolen directly from Mt. Gox cryptocurrency wallets starting in 2011.
Apart from the catastrophic risk of loss stemming from handing over control of your assets to a third party, as illustrated by the Mt. Gox debacle, there are other reasons to use a noncustodial wallet.
A custodial wallet provider can impose a maximum withdrawal limit or unilaterally set fees for using their services. You can temporarily lose access to your crypto if the platform has technical issues. Basically, your assets are at someone else’s mercy if you don’t own your keys. After all, as they say, "not your keys, not your coins."
On the other hand, a noncustodial wallet gives you complete charge of your hard-earned digital assets. You set your own rules and do with your funds as you wish. However, you alone are responsible for the safety of your keys. Hence, choosing from the best noncustodial wallets is critical.
What’s the Difference Between Hardware and Software Noncustodial Wallets?
Hardware wallets are secure and simple devices that store your cryptocurrency offline so you can’t be hacked. Also known as cold wallets, they look like small external drives and are independent of online exchange platforms. Hardware wallets require you to plug them into a device before you can access your cryptocurrency.
Software wallets are applications that you can download on your computer or mobile device. They securely store your private keys, and bitcoin provide an interface for you to trade and manage your crypto. Software wallets are encrypted, and require a password to access the keys that are stored in them.
When it comes to deciding between either of these best noncustodial wallets, investors tend to have differing opinions. By virtue of their offline status, hardware wallets are more secure than software wallets. Thus, these crypto wallets are better for storing large amounts of crypto. On the other hand, software wallets are connected to the Internet, so there’s a theoretical risk of possible breach or attack. However, they offer more convenience and are well-suited for users who transact frequently and need quick access to their assets.
Best Noncustodial Hardware Wallets.
The principle behind the best noncustodial hardware wallets that makes them more superior security-wise is that they’re fully isolated. This separates them from your highly vulnerable computer or connected device. Here are the hardware wallets worth considering.
When it comes to the best noncustodial wallets, Ledger is the most recognizable. They’re the established and reputable company behind the popular Ledger suite of hardware wallets. Your Ledger wallet is accessed through Ledger Live, a proprietary free desktop app that enables you to send and receive cryptocurrencies and check your balance, and gives you complete control of all your Ledger devices. Ledger currently offers two hardware wallets: Ledger Nano X and Ledger Nano S.
Ledger Nano X : This is Ledger’s flagship wallet device. It’s remarkable for its ability to manage over 100 crypto assets simultaneously, and it supports over 1,800 tokens. The Ledger Nano X features an OLED display and Bluetooth support, which means you can confirm your transactions on the go without the hassles of connecting a USB cable.
The Ledger Nano X is a bit pricey at $119, but it delivers solid security for your digital assets in a sleek and robust package.
Ledger Nano S : With an affordable price tag of $59, the Ledger Nano S offers the best bang for your buck. It comes with a user-friendly interface and clean design and provides support for btc
a wide range of cryptocurrencies.
KeepKey wallet is a well-designed, although relatively large, hardware wallet from ShapeShift. It features an easy-to-use interface in a solid, durable device. KeepKey’s stand-out feature is an in-wallet crypto exchange that allows you to trade between cryptocurrencies without resorting to an external exchange.
KeepKey stores all private keys with the industry-standard BIP32 protocol. For added security, KeepKey requires you to authorize each transaction manually, using a button on the device.
KeepKey currently retails for $49, which is an excellent deal, considering the wallet is feature-rich and beginner-friendly.
On the downside, KeepKey supports only 40 cryptocurrencies, far fewer than other best noncustodial wallets on this list for crypto storage.
Trezor pioneered the best noncustodial wallets market with its hardware crypto wallet technology, and buy bitcoin consequently has a solid reputation in the industry. Trezor wallets are unique in that they’re the only hardware wallets to offer native support to ERC20 tokens. On the flip side, updating the firmware on Trezor BNB wallets often causes the whole wallet to be deleted. This can be scary for a new user; however, you can easily enter your backup phrase and restore your wallet quickly. Like Ledger, Trezor offers two hardware wallet devices: Binance Trezor Model One and Trezor Model T.
Trezor Model T : The Trezor Model T shares the same features as the Trezor Model One, except for its newly introduced large touchscreen.