EN
In this article, we explain what is self custody and why it's important, we will then look at many alternatives for self-custody focusing on some popular hot wallets.
Self Custody
During the bear market or any moments of FUD traders might be in the position of having to withdraw their coins from the exchanges ASAP. In moments of panic, you don't want to be trapped in the exchange when they temporarily suspend withdrawals. When this happens, there is no time to research where to move the coins, so you need to know and plan beforehand where you can safely store your money. This is a particularly difficult task especially if you are trading crypto with bots, as you might be left with very small caps tokens that have very little compatibility across storage solutions. Withdrawing assets is a good practice at any time to protect your portfolio, not just during the bear market.
Self-custody in crypto in fact means holding and managing your own cryptocurrencies without relying on third-party custodians such as exchanges wallets or anyone else. Therefore you have full control over your digital assets and the private keys that give you access to them.
It's important because it gives you more security and control over your money. When you have your own “keys”, no one can take your money without your permission. This is different from using an exchange where someone else has your keys and can access your money. After seeing so many exchanges and crypto projects disappear over time you can now understand how crucial it is to be able to store somewhere else your hard-earned coins.
Self-custody also means you can keep your financial information private. No one has to know how much money you have or what you're doing with it. You can also send and receive crypto instantly without using an intermediary (the exchange is the middleman). However, self-custody does require a bit of extra technical expertise and responsibility. You need to know how to keep your keys safe and manage your digital money on your own. There is no way to recover your keys if you lose them and you need to make sure no one can see them either. So you will need to back up your keys, use strong passwords, and avoid phishing attacks or suspicious websites.
Types of self custody
There are two ways to store your coins: using a cold storage system or hot storage.
The main difference between them is the level of security and accessibility they offer.
A. Hardware Wallets and Paper wallets
These wallets offer a cold storage solution that keeps your cryptocurrencies in a wallet that is not connected to the internet.
Hardware wallets
These are physical devices that you can use to store your private keys offline, away from potential hackers or online threats. You will need to purchase the hardware in order to use this wallet. Popular manufacturers are Ledger and Trezor.
Paper wallets
These are physical copies of your private keys printed on a piece of paper, like secret notes that you write down and keep in a safe place. You can generate a paper wallet using services like Bitaddress or Walletgenerator, and then store it in a safe place. This method is free. It is less convenient for frequent transactions but useful for long-term storage.
B. Software Wallets and Self-custody on exchanges
These wallets offer a hot storage solution that keeps your cryptocurrencies in a non physicalwallet that is connected to the internet.
Software wallets
You can download and install these digital wallets on your computer or mobile device. With these wallets, you can manage your own private keys and have access to your funds at any time. Examples of these wallets include Metamask, Exodus, and Atomic. These wallets are free.
Self-custody on exchanges
Some crypto exchanges like Kraken and Binance allow users to have self-custody of their assets by giving them access to their private keys. This way, you can trade and manage your funds while keeping control of your private keys. This method is also free and it is basically the same as having s software wallet.
In general software wallets (hot storage) are considered less secure than hardware wallets (cold storage), because they are connected to the internet. However, they are more accessible and convenient for frequent transactions. Self-custody wallets are only as secure as the user makes them. Self-custody wallets provide you, or anybody else, access to your cryptocurrency, therefore they will be highly insecure if they are not physically and digitally secured.
Popular self custody wallets
We will now briefly look into some well known wallets, they are just some of the many available options the choice depends on the coins you are holding and the features you want to use.
Metamask
Metamask Logo
Metamask is perhaps the most popular that allows you to store, manage and interact with cryptocurrency and decentralized applications (DApps) on the Ethereum blockchain. It is popular mostly because it is integrated with OpenSea NFT (you can easily see the NFT within the app upon purchase) and because it's the number one go-to wallet connection when swapping coins on Pancake and Uniswap.
Metamask is available in the version of a mobile app as well as a browser extension that you can install on your desktop computer or laptop, and it integrates seamlessly with your browser. It acts as a bridge between your browser and the Ethereum blockchain, allowing you to interact with Ethereum-based websites and applications without the need for a separate wallet.
With Metamask, you can securely hold your Ethereum and other ERC-20 tokens, send and receive cryptocurrency, and interact with decentralized applications (DApps) directly from your browser. For example, you can use Metamask to buy and sell cryptocurrency on decentralized exchanges, participate in token sales (ICOs), and play blockchain-based games.
One of the great things about Metamask is that it's easy to use and has a user-friendly interface. It also offers robust security features such as two-factor authentication, password protection, and backing up your private keys.
| Pros | Cons |
| The interface and design are simple to use and user-friendly. | No 2FA security protection. |
| Custom fee support for altcoins transactions: you can adjust the gas fee before confirming a transaction. | Support Ethereum tokens only. |
| Metamask is an open-source software, accessible through several browser networks. | Tokens from other chains, such as the Binance Smart Chain (BSC), are also supported by MetaMask. To store BEP-20 tokens, you must manually add BSC to the wallet. |
| NFT visible on the phone app. | The internet browser retains control of private keys when you access it with the browser extension. |
| Connection to ledger devices. | Limited customer support. |
Overall, Metamask is a great tool for anyone wanting to get involved with Ethereum and decentralized finance (DeFi).
Exodus
Exodus Logo
Exodus is a hot wallet that lets you securely store and manage your cryptocurrency.
One of the great things about Exodus is that it has a beautiful interface, and it is available as a mobile app as well as a desktop app. With Exodus, you can store a variety of cryptocurrencies and it is effortless to stake many coins earning passive income.
Exodus offers some cool features like a built-in exchange that lets you swap one cryptocurrency for another without leaving the app. It also has a portfolio tracker that lets you keep track of your investments and how they're performing.
| Pros | Cons |
| Exceptional desktop app and portfolio tracker. | No 2FA security protection. |
| Great customer service. | No custom fee support for altcoins. The wallet does not allow custom network fees for Ethereum and altcoins. Users can currently only customize Bitcoin and Ethereum network fees. |
| Connection to dedicated offline Trezore storage devices. | There is no support for cryptocurrency-to-fiat conversion. |
| Easy staking and rewards program. | Exodus is not open-source, so no one outside the organization has access to or can edit the Exodus Wallet software code. |
Overall, Exodus is a great choice for anyone who wants a user-friendly and visually appealing digital storage solution that can keep multiple cryptocurrencies and offers some cool features like a built-in exchange and portfolio tracker.
Defi Wallet
Defi Wallet Logo
Crypto.com DeFi Wallet is the official decentralized non-custodial hot storage solution offered by Crypto.com, a leading cryptocurrency platform. The wallet is designed to allow users to keep, manage and interact with decentralized finance (DeFi) protocols and applications (dApps).
It is very powerful because even if it's an exchange-based wallet it also has all the perks of the “independent” wallets like Metamask and Exodus (dApps, swap, staking, etc). And on top of this, the coins are stored in a cold storage Ledger. This means that this is still a hot wallet (so you still need to keep your keys secure), but the funds are kept safe from potential hackers by a trusted company.
Crypto.com DeFi Wallet supports a variety of cryptocurrencies, it allows users to easily buy, sell, and transfer cryptocurrencies, as well as participate in staking and yield farming. Most of the transactions are made within the Crypto.com ecosystem using CRO tokens for fees within the crypto.org blockchain. It also supports ERC-20 tokens, which are used in many DeFi protocols.
One of the key features of the Crypto.com DeFi Wallet is its integration with the Crypto.com DeFi Swap platform. DeFi Swap is a decentralized exchange (DEX) that allows users to trade cryptocurrencies directly from their wallets. The exchange supports a range of DeFi tokens and offers competitive fees and liquidity.
Another notable feature of the Crypto.com DeFi Wallet is its integration with the Crypto.com Visa Card. The Visa Card allows users to spend their cryptocurrencies at millions of merchants worldwide, and earn cashback rewards in the process.
| Pros | Cons |
| All-in-one integration solution with an exchange, defi, and fiat with a debit card. | Great mobile app, a browser extension is available, but the desktop version is not user-friendly. |
| Recovery phrase of 12, 18, or 24 words for added security. | Limited customer support, to receive better support as well as information material you need to be a crypto.com user. |
| 2FA security protection is available. | Limited custom fee support for altcoins, you can only speed up the transaction not setting up a cap like in Metamask. |
| Defi Wallet is open-source. | |
| Staking and rewards program. | |
| Connection to dedicated offline Ledger storage devices. | |
| Integration with Defi Swap (DEX). |
Overall, the Crypto.com DeFi Wallet is a user-friendly and secure option for anyone looking to participate in the growing DeFi ecosystem. With its intuitive interface and range of features, it is an ideal choice for both beginners and experienced crypto users offering an all-in-one solution from purchasing crypto with fiat, trading, and self-custody.
Bitkeep
Bitkeep Logo
BitKeep is a new multi-chain hot storage solution. The great thing about this wallet is that you can manage your crypto portfolio across more than 90 blockchain networks by importing current wallets or creating new ones. Its efficient cross-chain trading enables you to gain access also to NFTs. You can also learn about various NFTs, DeFi protocols, and DAOs. Through their Web3 DApp browser, you may explore over 20,000 DApps across several networks.
BitKeep uses a proprietary DESM (Double Encryption Storage Mechanism) to protect your crypto assets. Even if your device is taken, your assets will be safe.
It is available as an app or a web browser extension.
Another incredible feature is that they seem to have solved the problem of cross-chain fees facilitating multi-chain transactions. Web3 users do not need to hold gas tokens from each mainnet when interacting across chains using GASU, and any gas fees incurred will be paid with GASU. GASU will support more than 50 public chains in the future but will not be limited to any of them. GASU required for cross-chain transactions will be calculated and consumed in real-time based on each major chain's gas cost.
| Pros | Cons |
| The most advanced multichain wallet that supports 90 networks | A project that is very young and not as well known as some of its competitors |
| Very secure as it uses a Double Encryption Storage Mechanism | Limited customer support, to receive better support as well as information material you need to be a crypto.com user. |
| It has resolved the problem of cross-chain fees with GASU | Limited custom fee support for altcoins, you can only speed up the transaction not setting up a cap like in Metamask. |
| Offers a very intuitive DApp store, an NFT marketplace, and DEX | Connection to hardware wallet not available yet. |
| 2FA security protection is available. | The browser extension version has lesser features than the Mobile one. |
Bitkeep is a very flexible storage solution for anyone who wants to swap coins across chains seamlessly, wants to keep all the coins in one single wallet and wants and additional layer of security.
Conclusion
In conclusion, self-custody in crypto is the key to unlocking true ownership, security, and freedom. By taking control of your private keys and wallets, you are in charge of your digital assets, safeguarding them from hacks and theft. Self-custody aligns with the decentralized nature of cryptocurrencies, promoting privacy, trust, and financial independence. Embrace self-custody and embark on a journey of empowerment in the exciting world of crypto.
Self Custody FAQ
How to choose a decentralized wallet
There are many hot wallets available for storing cryptocurrencies, and the choice can be quite daunting. There are some key things to remember that will help you choose which is the right one for you.
Security
Security is a top priority when it comes to storing cryptocurrencies. Look for a wallet that offers strong encryption, two-factor authentication, and password protection. You should also check the wallet's track record and reviews to ensure that it has a good reputation for strong security measures. Please note that even the most secure crypto wallet if you have poor private key management.
Cryptocurrency support
Make sure that the wallet supports the cryptocurrencies you want to hodl. Different crypto wallets support different cryptocurrencies, so it's important to choose one that matches your needs.
Large exchanges usually have their official non custodial wallet. These wallets are usually the most compatible and easy to use because they allow you to make transfers using their utility tokens for fees. For example, Binance's official decentralized wallet is Trust Wallet. It is a BNB wallet (BNB is Binance's utility token) and it allows you to transfer most of the coins using the BNB blockchain. Other wallets that belong to this category are for example Halo for Kucoin, Coinbase wallet for Coinbase, and so on.
User-friendliness
Look for a wallet that is easy to use and has a user-friendly interface. This will make it simple to manage your cryptocurrencies and make transactions. Some wallets offer customer support so if you are new to this topic you can get help if you encounter any issues or have questions.
Wallets also come in different formats: some wallets are only available as mobile wallets app, some have also a browser extension integration, and some also have a desktop app. So you can choose the one that better suits your trading/investing style.
Extra features
Exchange wallets are a very good option if you are in a hurry, however, if you do some more research you can find crypto wallets that allow you to do more than just keep your coins and let you buy, convert and swap crypto tokens as well as NFT and interact with dApps using smart contracts. You could actually earn passive income while your crypto is stored away. Some of these popular wallets are Metamask, Exodus, and Defi Wallet. It is very important to only interact with trusted dApps (Decentralized applications). If a smart contract is not properly audited or written with errors, it can lead to financial losses or hacks.
What is the disadvantage of a custodial wallet?
Custodial crypto wallets, where a third-party holds and manages your cryptocurrency on your behalf, do have some disadvantages:
Lack of Control: When using a custodial wallet, you are entrusting your funds to a third party. This means you rely on their security measures and policies. You may not have complete control over your public and private keys, limiting your ability to manage or transfer your funds as you please. If the custodial service experiences technical issues, restrictions, or even goes out of business, you could face difficulties accessing your funds.
Security Risks: Custodial wallets create a central point of failure. If the custodian's systems are compromised or hacked, your funds are at risk. Additionally, custodial services can be subject to internal fraud or mismanagement, potentially leading to the loss of your funds.
Privacy Concerns: When using a custodial wallet, you often need to provide personal information and go through Know Your Customer (KYC) procedures. This compromises your privacy and can expose you to potential data breaches or misuse of your information.
Dependency on Third Parties: By using a custodial wallet, you rely on the custodian's operational reliability and integrity. If the service experiences downtime, technical issues, or even regulatory actions, you may face limitations on accessing or managing your funds.
Counter to Decentralization: Cryptocurrencies were designed to operate in a decentralized manner, allowing individuals to have direct control over their funds. Custodial wallets introduce a centralized intermediary, which goes against the core principles of cryptocurrencies and can undermine the advantages of decentralization.
It's important to carefully weigh the advantages and disadvantages before choosing a wallet solution. Many individuals opt for self-custody to retain control, enhance security, and align with the core principles of cryptocurrencies. However, it's essential to ensure you follow best security practices and safeguard your private keys to avoid any potential risks.
What is the best non custodial wallet?
In this article we provided several examples of good non custodial crypto wallets, and there are many other available, each with its own unique features and strengths. It's essential to conduct thorough research, consider the wallet's security measures, supported cryptocurrencies, user experience, and community reputation before choosing a wallet that best suits your requirements.
What are public and private keys?
In the context of cryptocurrency wallets, the keys are cryptographic elements that play a vital role in securing and accessing your digital assets. Here's an explanation of each:
Public Key: A public key is a long string of alphanumeric characters that serves as your wallet's address. It is derived from your crypto wallet's private key using a mathematical algorithm. The public key a public address, allowing you to receive payments. It is safe to share your public key as it does not reveal any sensitive information about your wallet or get to your funds.
Private Key: A private key is a randomly generated, unique string of characters that is securely generated within your wallet. It is the most critical component of your wallet as it grants access to your funds and allows you to sign transactions. Your private key should be kept confidential and never shared with anyone. With possession of the private key, individuals can control and manage the associated cryptocurrency wallet. Losing or compromising the private key can result in permanent loss of access to your funds.
When sending funds from your crypto wallet, the transaction is signed with your private key, providing cryptographic proof that you are the rightful owner of the funds. The recipient can then verify the authenticity of the transaction using the corresponding public key.
It's worth noting that some wallets use additional layers of security, such as a mnemonic phrase (recovery phrase) or seed phrase, which are generated from the private key and allow to regain access to the crypto wallet or backup options. These phrases serve as a human-readable representation of the private key and should be stored securely as well.
