Pros and Cons of “Crypto” Wallets

8.17.2022
Vlad Estoup

Vlad is an ethos content contributor based in Vancouver, Canada. Vlad is focused on applying blockchain technology throughout various industries.

If you’re thinking of using your own wallet for NFTs, here’s a couple things that you should be thinking about.

Congratulations, you just purchased an NFT! But where should you store it for future use?

It’s important to decide how to store an NFT. After all, digital assets can be worth a lot, and we want to make sure that you keep them safe, whether you want to access them, sell them or transfer them to another person.

There are many benefits to having your own non-custodial wallet, such as:

  • Full ownership over your NFTs: putting your NFTs in your own non-custodial wallet means you fully own your NFT. Nobody but you can access the contents of your wallet, unless they have your private keys (which you should keep in a safe place!).
  • Unrestricted transactions: nobody can stop you from transacting to and from your wallet. Since you operate at your own discretion, you make all the decisions pertaining to what happens to the assets stored in your own private wallet. If you want to sell your NFT in a secondary marketplace, you can completely do so on your own.
  • Crypto & NFTs in the same place: you may be able to keep all your NFTs and crypto in the same wallet. This gives you quick access to whichever NFT you need to use, without having to deal with multiple logins, passwords and private keys.
  • Versatility & compatibility: non-custodial wallets often offer the benefit of operating on several platforms. From smartphone apps to browser extensions, they aren't limited to one website and can be easily accessed on most devices.
  • You pick your provider: there are several providers of non-custodial wallets. The biggest player in the space right now is Metamask, which is easily compatible with smartphones and browsers such as Google Chrome. But the beauty of using your own wallet is the freedom to choose between all the different options, and using the one that gives you the best experience.

Creating and managing your own wallet, however, can be a bit intimidating. If you’re new to crypto and NFTs, we recommend you make yourself familiar with the technology first, before sending valuable assets to your own non-custodial wallet. This is why we offer to safely hold your NFTs on your behalf.

Keeping your digital assets in your own non-custodial wallet carries its own set of risks:

  • Inputting the wrong address: if you accidentally type the wrong address when sending your NFTs to your own wallet, you will lose them completely, and there’s not much anyone can do to give them back to you.
  • Getting hacked: if a malicious hacker gets ahold of your private keys, they can easily access your wallet and steal its contents. There are several tactics hackers employ to gain access to people’s keys, from creating pages that look exactly like well-known crypto wallets (lookalike pages) and waiting for people to input their credentials, to full-on hacking your wallet app directly. By letting a third-party hold your NFTs, you can reduce this risk dramatically as it is much harder to hack a wallet that is professionally managed.
  • Losing your keys: if you lose the login credentials to your ethos account, we will gladly help you recover your password and get access to your assets. But if you happen to lose your private keys for your non-custodial wallet, your wallet will become inaccessible. This means its contents will remain in there until you or someone else finds your keys.

If you decide to have a non-custodial wallet, here are some tips to keep your assets safe:

  • Always copy/paste the address you're sending to: this will ensure there are no typos in those complicated wallet addresses, and your NFTs will arrive safely.
  • Be careful with sensitive information: never give away your wallet address or information to any third party online except for people you trust. Because the blockchain is public and decentralized, anyone who knows your public address can see your transaction history and what assets you have inside your wallet. They can also send things to your wallet without your permission.
  • Consider having more than one wallet: many people choose to have multiple wallets that serve different purposes. The most common example of this is having a “social wallet” that is tied to their public identity while also having a “hardware (cold) wallet” that is anonymous. Some popular “social wallets” include Metamask, Blocto, or Rainbow, and some popular “hardware” wallets include Trezor or Ledger. Although “social wallets” are still quite secure, hardware wallets are offline wallets which are meant for holding assets long term and are recommended for individuals with a large amount of crypto or NFTs.
  • Only use trusted wallet providers: we don't pick favorites, but it's probably a good idea to stick to wallet providers that have proven to be reliable and resilient to hacks. Some of the bigger ones are Metamask and Blocto.
  • Keep your private keys private (and safe): we've all heard the story of a man who had over $350 million worth of bitcoin in a hard drive and threw it away, without storing his private keys. Don't be that guy! Ensure that you personally backup your private key and/or secret phrase through methods such as
    • writing it down on a piece of paper and storing it in a secure place
    • Stamping it on a piece of metal. Many products exist solely for this purpose, such as the Billfodl.

It’s important to keep your secret phrase/private key safe because it is the only thing that could let you back into your wallet if you were to lose access to it.

In conclusion, there are two main types of crypto wallets: custodial and non-custodial. While there are many benefits to holding your own digital assets without the help of a third-party, this also presents a series of risks (which can be mitigated with proper safety measures). We will always offer our users the ability to connect with mainstream non-custodial wallets, allowing them to receive their NFTs wherever they’d like.

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