Non-custodial Wallet
A wallet where you control the private keys, without relying on a third party to hold your funds.
A non-custodial wallet is software or hardware that lets you control your funds directly because you hold the private keys. No exchange or third party can freeze, spend, or require permission for your coins.
"Mobile wallets like those for Bitcoin Cash are typically non-custodial—your 12 or 24-word mnemonic gives you full control over your BCH."
Security in non-custodial wallets depends on how well you protect your keys or mnemonic. Good practices include offline backups, hardware wallets for larger balances, and avoiding screenshots or cloud storage of seed phrases.
"Storing your mnemonic on a metal backup plate and keeping it in a safe reduces risks from fire or device loss."
The trade-off is responsibility: if you lose your keys, there’s no password reset. Many users accept this for the sovereignty and reduced counterparty risk compared to custodial services.
"If you forget the passphrase for your non-custodial wallet and lose your mnemonic, your funds are unrecoverable."
Related Terms
Custodial Wallet
→A wallet where a third party controls the private keys on your behalf.
Hardware wallet
→A hardware wallet is a dedicated physical device that securely stores private keys and signs transactions offline to protect against malware and remote attacks.
Mnemonic
→A sequence of words used to generate and recover a private key, typically 12 or 24 words long.
Key pair
→A key pair consists of a private key and a corresponding public key used for digital signatures and addresses in cryptocurrencies.
Wallet
→A tool that stores private keys and allows users to interact with blockchain networks.
All terms and definitions may update as the Cryptionary improves.
