When you keep your purchased cryptocurrency on a centralized exchange such as Coinbase or Binance, you don't have full ownership of it. You hold an IOU for it, the value of which is dependent on the exchange's financial stability.
To have complete control over your digital assets, you must transfer their private keys from the exchange to a non-custodial wallet.
🔑 What is a private key?
A private key is sometimes referred to as a secret key.
Private keys are long, randomly generated strings of letters and numbers that cannot easily be guessed. They can be used to access cryptographically encoded information when paired with a public key counterpart.
Private keys should be stored securely in secret locations.
Custodial vs. non-custodial wallets
Here are some differences between custodial and non-custodial wallets
Custodial wallets
- The private keys to digital assets are held by a third party (e.g. a crypto exchange)
- Sometimes referred to as "hot wallets", these are always connected to the internet
- They do not require you to write down a 12- to 24-word seed recovery phrase
- Funds stored in custodial wallets are technically IOUs and are only as good as the solvency of the custodian's company
Non-custodial wallets
- The private keys to digital assets are held by the owner of the assets
- The hardware versions of these wallets are sometimes referred to as "cold storage wallets", as they remain mostly disconnected from the internet
- They require you to write down a 12- to 24-word seed recovery phrase
- Funds stored in a non-custodial wallet are the actual digital assets, which can be accessed via the blockchain
RuufTalk's top Non-Custodial Wallets
- Ledger Nano X: The Best Overall Non-Custodial Wallet
- Ledger Nano S Plus: The Best Affordable Non-Custodial Wallet
- RuufPay: Best Non-Custodial Wallet Newcomers
- Trezor Model T: Best for Experienced Users
- Atomic Wallet: Best Desktop Non-Custodial Wallet
- Trust Wallet: Best Mobile Non-Custodial Wallet for BNB
- Coinbase Wallet: Best Non-Custodial Wallet for Exchanges
- MetaMask: The Best Web3 Non-Custodial Wallet
- COLDCARD Mk4: Best for Bitcoin Storage
- Trezor Model One: The Original Non-Custodial Wallet
- XDEFI Wallet: Ideal for NFTs
RuufTalk evaluates the most secure non-custodial wallets available in the US, taking into consideration factors such as overall safety, functionality, cost, and supported digital assets, including coins, tokens, and NFTs. Hardware wallets are the safest option, but we have also included a variety of alternatives to suit your specific needs.
Ledger Nano X
The Ledger Nano X is a top-of-the-line USB hardware wallet from Ledger, a company renowned for its innovative security solutions for digital asset self-custody since 2014.
We selected the Ledger Nano X as the best overall non-custodial wallet due to its ability to securely store the keys to over 5,500 cryptocurrencies and NFTs, as well as its capability to allow staking on-the-go.
The Ledger Nano X is an upgrade from the budget-friendly Ledger Nano S Plus, offering Bluetooth compatibility and compatibility with both Android and iOS devices for increased mobility.
Ledger Nano S Plus
The Ledger Nano S Plus is the best value non-custodial wallet as it provides high-level security and most of the same features as the Ledger Nano X, at a much lower cost.
The Nano S Plus supports cold storage for over 5,500 cryptocurrencies, tokens, and NFTs, and also includes staking and crypto exchange capabilities through Ledger Live.
If you prioritize secure offline storage of your private keys and don't need on-the-go access to your assets (as the Nano S Plus lacks Bluetooth), this hardware wallet is an excellent option.
The Ledger Nano S Plus is such an exceptional balance of security, supported assets, features, and affordability that we found it to be the best value choice in the market.
RuufPay Wallet
The Best Non-Custodial Wallet for Beginners
RuufPay is a software wallet accessible through mobile devices that provides access to a vast array of digital assets. Unlike other wallets that only allow management of coins on a single network, RuufPay supports multiple blockchains including Ethereum and Polygon. This multi-functional feature makes it the preferred choice for beginners.
The wallet has added benefits such as a portfolio overview to help you track your holdings and an integrated exchange to buy and soon sell digital assets. RuufPay also supports staking of cryptocurrencies like RuufCoin (RUUF) with plans to support additional staking protocols including USDT, USDC, Ethereum and more.
RuufPay prioritizes simplicity and gets straight to the point with its features. It’s built for users who are fed up with all the centralized exchange hacks and are looking to get their first self-custody / non-custodial wallet.
RuufPay has plans to support many more networks in the near future including the Bitcoin Network, BNB network, Solana and more.
RuufPay is also building infrastructure to make it easy to pay rent in crypto.
The wallet is renowned for very low swap fees on tokens and a less-intimidating interface than the standard self-custody wallet.
One of RuufPay's most user-friendly features is its responsive support team. If you reach out for assistance, you can expect a reply within an hour.
You can get RuufPay here.
Trezor Model T
The Trezor Model T is deemed the best advanced non-custodial wallet due to its comprehensive array of advanced features. The wallet's multisignature (multisig) capability provides an extra layer of security for Bitcoin, as multiple parties must approve any transactions. The Model T also supports Taproot, enhancing the privacy of the Bitcoin network, lowering transaction fees, and allowing users to interact with BTC smart contracts.
For added anonymity, the Trezor Suite interface can be used to anonymize transactions through the Tor network. Additionally, the Model T includes the innovative Shamir backup system, which distributes the recovery phrase across multiple recovery shares for enhanced security.
Atomic Wallet
Atomic Wallet is the best desktop non-custodial wallet due to its support of over 500 cryptocurrencies and tokens on more than 50 blockchains through a single app, available on Windows, Mac, and Linux. Its user-friendly interface makes it a top choice for both new and experienced users.
Established in 2017 by Konstantin Gladych, CEO of Changelly, Atomic Wallet includes a built-in decentralized crypto exchange provided by Changelly, allowing for seamless cryptocurrency swaps or purchases using a credit or debit card.
With the ability to stake 10+ digital assets including Cardano (ADA), Cosmos (ATOM), and Tezos (XTZ), and a NFT gallery for the Solana blockchain, the wallet provides a wide range of features.
Trust Wallet
Trust Wallet is the a non-custodial mobile wallet owned by Binance, offering support for coins and tokens from 65 different blockchains. This eliminates the need to download multiple wallet apps.
The wallet offers quick import of popular coins and tokens, as well as charts and pricing information and notifications on your mobile device. You can also import custom tokens, but it's important to be cautious and verify the contract addresses, as fake versions of existing coins exist.
Trust Wallet also allows for connection to dApps and DEXs through the Wallet Connect extension, and you can buy cryptos with fiat through third-party providers such as Moonpay, and stake assets directly from the wallet.
Coinbase Wallet
The Coinbase Wallet offers a convenient, user-friendly experience for buying, holding, and managing cryptocurrency. No Coinbase account is necessary to use the wallet, but verified users can link directly to the Coinbase exchange. This makes it the best non-custodial exchange wallet available.
The Coinbase Wallet is accessible as both a mobile app and browser extension, with a user interface that is consistent with the Coinbase exchange. It supports a wide range of blockchains, including Solana, Fantom Opera, and all EVM-compatible chains, making it a versatile solution.
In terms of security, the Coinbase wallet meets the industry standard for non-custodial wallets, meaning there is some counterparty risk involved. However, for those who value the convenience of accessing their funds on Coinbase quickly and easily, this exchange wallet offers a lot of benefits.
MetaMask
With over 30 million active users, MetaMask is widely favored as the leading non-custodial wallet for Web3 apps. It is an obvious choice for the best non-custodial Web3 wallet.
MetaMask was one of the first wallets to bring the world of Web3 and DeFi to life. It operates on both desktop and mobile devices and allows you to connect to dApps, store NFTs and digital assets, and trade cryptocurrencies across various blockchains.
The key factor that contributes to the popularity of MetaMask's Web3 wallet is its capability to allow you to buy and sell cryptocurrencies without revealing any personal information. To start trading on DeFi exchanges, simply install the app or browser extension and log in using your private seed phrase.
Your seed phrase in MetaMask acts as a password, login, and proof of ownership all in one. Your information is not saved on any database, giving you complete ownership and control over your assets - an essential aspect of decentralization.
Keep in mind though - MetaMask will likely be too complex for newer users.
COLDCARD Mk4
The COLDCARD Mk4 is the best non-custodial wallet for Bitcoin, designed for privacy-conscious users who prioritize the security of their BTC. With its offline storage of private keys and the use of a Secure Element chip, like those found in credit cards and passports, the COLDCARD Mk4 offers top-notch security for Bitcoin maximalists. The wallet can be managed through the Sparrow Wallet desktop software and a microSD card, without the need for a direct connection to the device, but this requires purchasing a microSD card adapter for your computer.
Trezor Model One
The Trezor Model One deserves recognition as the original non-custodial hardware wallet. Since its release in 2012, Trezor has been leading the way in offline private key storage.
Inspired by the Mt. Gox crypto exchange hack of February 2014, the Trezor Model One offered a solution for investors to guarantee self-custody of their digital assets. It was the first of its kind to emphasize the importance of holding the private keys to truly own digital assets.
Although there may be more advanced hardware wallets available today, the Trezor Model One remains a reliable option with a history of security and affordability.
XDEFI Wallet
As a blockchain-agnostic wallet, XDEFI allows users to showcase NFTs from over 15 different blockchains. It's the best option for those seeking a non-custodial NFT wallet.
The XDEFI wallet has a user-friendly, cross-chain interface that makes it simple to send, receive, and trade NFTs and cryptocurrencies on various blockchains.
By installing the browser extension, you can set up an account directly in XDEFI or import it from an external wallet. Supported blockchains include ETH, BSC, Arbitrum, Thorchain, Bitcoin, and more.
Additionally, XDEFI offers the ability to make in-wallet swaps and purchase cryptocurrencies with any currency through its fiat gateway. Holding XDEFI tokens in the wallet enables staking, earning trading rebates and collecting utility NFTs.
Recap: What is a non-custodial wallet?
A non-custodial wallet is a type of crypto wallet that gives you control over your private keys, which secure your digital assets on blockchains. These wallets do not store your assets but rather the keys to access them. You can identify a non-custodial wallet by the seed phrase (a 12- to 24-word phrase used to recover your wallet if it is lost) that you wrote down during setup. Non-custodial wallets come in two types: software wallets, such as RuufPay Wallet, Atomic Wallet, Exodus Wallet, and MetaMask, which are connected to the internet, and hardware wallets, such as Ledger, Trezor, and COLDCARD, which are mostly offline and used for cold storage.
How do I know if I'm using a non-custodial wallet?
You'll know that you are using a non-custodial wallet if you've written down a 12- to 24-word seed phrase – or recovery phrase – when setting up your wallet (You better remember those words!).
If you weren't prompted to write down such a phrase, then you are using a custodial wallet and the private keys to your digital assets aren't in your control.
Non-custodial wallet pros and cons
Pros:
- Ownership of digital assets is directly in your control
- No reliance on the stability of a third-party custodian (such as a central crypto exchange)
- Ability to use digital assets in decentralized applications
Cons:
- Complete personal responsibility for safeguarding the private keys to digital assets
- Potential cost if purchasing a hardware wallet
Factors to consider when choosing a non-custodial wallet
- Software versus hardware: non-custodial hardware wallets are more secure as they are mostly offline, while software wallets are always connected to the internet
- Price: non-custodial software wallets are often free, but a hardware wallet must be purchased
- Features: consider if you want more than just control over private keys, such as staking or using dapps
- User interface: test and compare a few options before deciding on one with a suitable interface
Risks of using a non-custodial wallet
- Personal responsibility: you must securely store the 12-24 word seed phrase used to access your digital assets
- Risk of sending assets to the wrong address during transactions
- Possibility of being locked out of a hardware wallet by entering the wrong passcode too many times
What's the bottom line?
- Using a non-custodial wallet requires taking full responsibility for private keys to digital assets
- Do thorough research to choose the best wallet for your needs, considering factors such as software versus hardware, cost, features, and user interface
- By understanding secure digital asset storage and comparing options, you can better protect your crypto investments
