Know Why You Must Choose a Non-Custodial Wallet
No matter how many benefits blockchain and cryptocurrencies hold for us, there are certain inherent risk factors that you must keep in mind if you plan to hold coins anytime in the future.
More or less, all of these factors relate to one crucial aspect- security of funds. Whichever currency you choose to purchase, you can ensure its safety only by taking adequate precautionary measures. One of the most crucial safeguards that you need to consider is where you will store your funds.
Primarily, bitcoin wallets are of two types-custodial and non-custodial. The custodial wallet will let you store your private keys on a server, while you will have full control over your funds in the case of a non-custodial wallet. Here’s more that you should know about the differences in both of these wallets.
Only you can access your funds.
If you choose a custodial wallet, your private keys will be on the server, and only a login and password are required to access the account. Although this may appear simple to you as against entering private keys, blindly entrusting your private information with a third-party is not an excellent way to ensure the safety of your funds. A non-custodial wallet, such as Atomic wallet or Coinomi, will encrypt and store the private keys only on your device. Nobody apart from you will have access to the funds that are there in the wallet.
Free from external control and immediate withdrawals.
When a third party is involved, every action that you wish to perform requires approval from the said third party. This causes unnecessary delays, no matter how big or small the transaction is. On the other hand, a non-custodial wallet lets you withdraw funds instantly. You can transact almost as quickly as you decide to transfer funds.
Safety of funds.
There is always a chance that your funds will freeze if the KYC norms are not met. KYC procedure in itself takes around three to four days, and for that duration, you will have no control over your funds. Another drawback of custodial wallets is that the assets might freeze due to non-maintenance. The good thing about holding your funds in a non-custodial wallet is that your funds will not be harmed in any manner as you will have complete control over your private keys and funds.
No threat of hacks.
With custodial wallets, there is always a possibility of hacking. This is because an extensive user database marks centralized exchanges, and hackers find such wallets soft targets since there are numerous confirmations before access is granted. Such an incident can leave you deprived of your funds. Thus, it is recommended that you choose a non-custodial wallet for the storage of funds because of the enhanced security that it offers.
Easily accepts fork.
A custodial wallet is highly vulnerable as far as the fork is concerned. In such a scenario, you may be left without access to your funds, and you will not be able to send and receive coins till the platform approves the transactions. By choosing a non-custodial wallet over custodial one, you will not have to face such challenges on account of the fork.
When selecting from the full range of wallets available out there, your primary consideration should be the safety of your funds. By choosing a custodial wallet, you may face a complete block out on account of a hard fork, non-compliance of KYC norms, or no consent from the platform. Contrary to this, a non-custodial wallet will let you have complete control over your funds by providing you with software that you can easily install on your device.