Nearly a dozen years ago, Bitcoin (BTC) launched promising a payment system that is secure, borderless, and cheap – opening up the global financial system and banking the unbanked. Over the years, BTC morphed into more than a payment system, turning into a store of value (SoV) as its value surged – reaching an all-time high of $19,800 in 2017.
The switch to an SoV, however, comes with its own challenges. At its very core, the storage and security of the ‘digital gold’ are one of the biggest challenges for BTC. At launch, Satoshi Nakamoto – a pseudonym for the creator of Bitcoin – envisioned a platform that will offer users complete control and safety of their funds.
However, as BTC’s value appreciated, centralized exchanges and custodial services cropped up providing wallets in a bid to help ordinary users to “safely store their BTC”. While these centralized parties help non-technical users store their private keys and trade their BTC faster, they take away the function of blockchains – decentralization (managing your own ‘bank account’).
Need for self-custodial wallets
What is the issue with centralized crypto wallet providers?
Centralized crypto custodians and exchanges offer a fast and reliable way to transact cryptocurrencies such as Bitcoin and Ethereum. However, these establishments have been lacking in the security aspect given they store users’ private keys centrally and store these keys in hot wallets. Hot wallets or online wallets allow users to seamlessly trade and use their cryptocurrencies.
However, this has led to several exchanges being susceptible to hacking attempts, theft, phishing scams, exit scams, etc. in the past few years washing away millions (collectively, billions) of dollars in investors’ funds.
The low-security properties on centralized custodians have given rise to hardware wallets such as Ledger and Trezor, which increase the privacy and security of funds. They do so by storing your private keys offline on a USB drive. However, users shun these wallets (despite the high-security levels) in favor of the centralized online wallets due to reliability, speed, and liquidity.
The question arises, “Can crypto users enjoy speed, reliability, and non-custodial security – all together – on a crypto wallet platform?” Yes.
In the next section, we discuss the security measures you should be looking for in a crypto wallet, how to ensure your wallet is secure, and the most secure wallets for crypto users in 2020.
What to look for in a crypto wallet
- Security: This is perhaps the most important feature in any wallet. Online wallets are considered to be more susceptible to insecurity attacks and with good reason too; they’re easier to hack. Hardware wallets on the other hand are seen as being safer since the currency is stored offline.
- Anonymity: Users who are interested in remaining anonymous, this is probably a feature they should consider.
- Reputation: It is important for one to go through wallet reviews to ascertain where it stands amongst other users in the community, just to be sure about what they’re committing themselves to.
- User interface: The Coinbase interface is recommended for most beginners. It is easily navigable and additionally, insures 100% of its value.
Best non-custodial crypto wallets in security
1. Bitamp – For Security and speed (Recommended)
According to the official website, Bitamp “is an open-source, client-side, free Bitcoin wallet that allows you to send and receive Bitcoin securely on a blockchain”. Simply put, Bitamp is a self-custodial cryptocurrency wallet that allows you to send and receive Bitcoins.
The wallet is designed under an MIT license which allows users across the world to send and receive BTC. The global license compatible wallet means that developers across the world have very little restrictions on using it.
- Non-custodial wallet: Enhances the security of the wallet by allowing direct payments to your offline wallets. This means the company does not transfer, store, or save users’ private keys on its server.
- Transfers to hardware wallets: Bitamp also offers a unique direct connection to top hardware wallets including Ledger Nano S (mentioned below), Trezor, KeepKey, Electrum, and Mycelium.
- An educative community: Bitamp also builds on its crypto-community values by offering educational and informative material on its website – especially to new users. Pieces on ‘How to buy Bitcoin’, ‘How to secure your wallet’, ‘Steps to Bitcoin Mining’ etc. are available on Bitamp.
- Lack of multiple cryptocurrencies: The secure, fast, and non-custodial wallet only allows Bitcoin transactions. This is a very narrow scope but the company is working on adding new cryptos in the future.
- Relatively young: In comparison to other wallets on our list, Bitamp is still in its formative stages hence less widely adopted.
2. Ledger Wallet Nano S – Security, no speed
Ledger Nano S cryptocurrency hardware wallet is one of the best among its peers, offering users an offline non-custodial wallet to store cryptocurrencies. The hardware wallet comes with a screen and is compatible with any computer operating system.
- Offline non-custodial wallet: Ledger hardware wallet allows you to store your own private keys on a USB drive that is forever offline till connected to a computer. This enhances the security properties to store your Bitcoins.
- 12-passphrase key: The wallet also provides a 12-word passphrase key that allows you to recover your funds in case you lose your wallet.
- Slow transactions: As mentioned before, hardware wallets make it harder for you to transact your crypto given the tough security protocols set in place.
- Expensive: While Bitamp is a free Bitcoin wallet, Ledger Nano S comes at a hefty price of >$150 which discourages small crypto holders from storing their assets in the wallet.
3. Bread Wallet – Multiple coins, reduced speed, and security
Bread is a digital app non-custodial wallet that allows you to receive and send Bitcoins. The app is available on a web browser and on mobile devices – on iOS and Android App stores. The wallet allows storing, sending, and conversion of multiple currencies including Bitcoin, Ethereum, and Bitcoin Cash (BCH).
- Availability of multiple coins: Bread Wallet offers three currencies on its non-custodial wallet – BTC, ETH, and BCH.
- Easy to use interface: The wallet also provides users with a beautifully designed and easy-to-navigate interface.
- Lacks two-factor authentication: Lack of SMS-authentication or Google Authentication reduces the security properties of the Bread wallet.
- Slow and third party interactions: Despite Bread Wallet being a non-custodial wallet, transactions on the platform pass through a third party reducing the users’ privacy. Moreover, some users have previously complained the site is slow and cumbersome.
|Wallet||Type||Security||Ease of use||Price||Website|
|Ledger Nano S||Hardware||High||Moderate||>$150||Ledger|
Table showing the different qualities of non-custodial wallets
After a comprehensive look at the non-custodial wallets above, we recommend Bitamp for its secure and fast transactions. Moreover, the wallet is a free open-sourced wallet which means developers around the world work on improving it by the day enhancing your crypto investing and HODLing.
Remember not your private keys, not your coins! Always try to use non-custodial wallets to store your cryptocurrency assets.
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