PRYZ Educates — What is a Non Custodial Crypto Wallet?

3 min readJan 27, 2022

In this article we talk about what a non-custodial wallet is and the benefits of using one over a custodial wallet. At the end there are some useful videos for those who prefer visual content.

If you have purchased cryptocurrency in the past, chances are you’ve used a custodial wallet. Any Bitcoin exchange like Binance, Coinbase or Swissborg is considered to be custodial. Those third-party cryptocurrency exchanges offer to protect your crypto assets for you, but in doing so, you relinquish full control over those crypto assets. These are also referred to as hosted wallets by most regulators, it is where the private keys are managed by a trusted third party.

Not your keys, not your crypto.

You’ve probably heard that old custodial cliche a million times. Seasoned crypto veterans often harangue new users about storing crypto on custodial, third-party providers for that reason… key ownership. However, these custodial wallet providers often have the high UI/UX that users are already familiar with when they use other banking applications. It’s hard to stay away from custodial solutions, especially for those who are brand new to crypto; but the reality is that the user relies on that third party to responsibly manage their assets and provide their funds back to them when they request to move them from their platform.

Yet, as easy as these custodial wallets are, crypto veterans often suggest something different. What do the seasoned veterans suggest?

Non-Custodial Wallets

A non-custodial wallet is a type of wallet that allows users to hold and own their private key while having full control of their funds. Keys are held in encrypted storage.

Two main types of non-custodial wallets that exist today are:

Hardware Wallets: A physical device similar to a flash drive that is disconnected from the internet.
Web-Based Wallets & Mobile Wallets: These can be accessed from any device with a private key login.

Non-custodial wallets remain tough to use. Traditionally, non-custodial wallets make users remember a 12–24 word seed phrase composed of random words to access an account. The phrase is used as a backup password recovery method.

Examples of the most used Web and Mobile based Non-Custodial Wallets

Metamask