Remember
the egregious breach that exposed Ledger’s entire trove of customer data to the
public? Now, the hardware wallet company and e-commerce vendor Shopify have
been slapped with a class-action lawsuit for failing to contain
the damage. This should be a wake-up call for you as a cryptocurrency investor.
It
would help if you never grew complacent over the security of either or both
your hot and cold digital wallets. But, what if you could still beat the risk
of getting “phished” or “wallet hacked?”
Most
of the cryptocurrency wallets are centralized in nature, making them prone to
man-in-the-middle attacks and a bevy of other hacks. For wallets to be truly
secure, they need to be decentralized. Here’s why.
Control of Funds
Decentralized
crypto wallets are non-custodial. This means that you, the user, have exclusive
access to your wallet’s private keys (and not a third-party custodian). As a
consequence of which you stand in a position to exercise complete control over
your crypto funds.
Enhanced Security
A
cryptocurrency wallet that doesn’t have anything to do with a third-party
intervention doesn’t compromise security. As is the case with Ledger, for
instance, and many such centralized wallets are susceptible to despicable
hacks. Decentralized wallets, hands down, are way more secure than wallets
hosted by crypto exchanges or custodial wallets since users keep the private
keys with themselves, as discussed in the previous point.
DeFi Compatibility
As
is the case with most custodial wallets, they are integrated into a larger
ecosystem built around a particular crypto exchange, defi trading
platform, or other such flagship product.
This increases the risk associated with the stored funds in these crypto
wallets, as exchanges such as Binance, Coincheck, and Bitrue, Bithumb, and
Poloniex have a marred history of facing the brunt of brutal online robberies.
Mt.Gox, a Tokyo-based crypto exchange, underwent the largest hack in 2014 but
eventually filed for bankruptcy because of a prolonged attack that deprived users
of 740,000 BTC.
For
non-custodial defi exchange wallets, that is not the
case, since there is no instance of crypto balances or trading data being
stored on a centralized server. On the positive side, a DeFi wallet helps you connect with a plethora of DeFi protocols that
operate on a purely peer-to-peer basis, without intermediaries.
No Requirement for KYC Procedures
Another
feature that makes non-custodial wallets secure is the non-requirement of users
to go through elaborate KYC (know-your-customer) procedures or share background
information. This reduces the risk of doxxing or data breaches, something that
happened with Ledger.
But
centralized wallets, as usual, are operated by specific entities and custodians
that seek to comply with the regulations in their respective jurisdictions. So,
users have to share their ID data before depositing, withdrawing, or trading
cryptocurrencies crypto funds for reasons related to compliance.
Non-Custodial Wallets Are the Way
Forward...
All
of the above is true for non-custodial wallets. With a decentralized crypto
wallet app to gain access to many DeFi opportunities on the go and explore a
world of limitless possibilities. And not just with DeFi, you can also leverage
such a wallet to play and experiment with non-fungible tokens (NFTs) as well.
So,
it becomes quite clear from the above points how non-hosted wallets can truly
up the security quotient for your crypto funds. How decentralized crypto
wallets can let you interact seamlessly, intuitively, and securely with web 3
technologies while maintaining the core ideology of “being your own bank”.
...But the Road to Wallet
Decentralization Has Been Long and Winding
Contrary
to what you think, the journey in wallet innovation has taken its own sweet
time. As Rome was not built in a day, similarly these non-custodial wallets
that guarantee absolute usage of freedom are a result of research and
development over the past few years.
Crypto
wallet engineering teams worked tirelessly and were able to bring about drastic
improvements to their underlying architecture while including other asset
management tools, which would allow investors and users to smoothly and
securely access the next generation of financial products.
The
end result is nothing less than a wonder!
Non-custodial
decentralized wallets ensure the complete safety of your stored funds without
you having to rely on third-party institutions to guarantee the “well-being” of
your assets. Something which Satoshi envisioned when he released Bitcoin’s
whitepaper.
The
early years saw crypto wallets with poor, crude, and inefficient user
interfaces dominate the market. But things have taken a very different turn on
the wallet front in the last couple of years. With DeFi’s boom, many wallets
have brought in significant changes in their designs and architecture and are
helping create better experiences for users.
There
are, however, very few wallets that provide a single point of entry into a
greater ecosystem that allows you to tap into the world of DeFi. Eidoo is one
such decentralized crypto wallet app that is referred to as the Swiss Army
Knife of wallets because of its geographic origins and the tools that it
offers.
It
enables users to hold Bitcoin, as well as Litecoin, Ethereum, and all ERC-20
tokens out there. Eidoo helps you manage DeFi tokens as well as implement yield
farming strategies.
In
fact, its palette of functionalities exceeds the definitions of a conventional
wallet, as it hosts an entire arsenal of features to make the life of investors
easy.
While
the ERC20 wallet is the flagship product, Eidoo is the perfect solution for
maintaining and controlling your cryptocurrency assets independently from the
prying eyes of a third-party custodian. In comparing custodial vs.
non-custodial wallets, the latter always have an advantage, and Eidoo can be
your go-to non-custodial wallet.
Non-custodial
wallets are secure because they let you have full control over your crypto
funds. The risk of a data breach or fund pilferage is substantially less. There
is just one primary drawback. You have to keep your private key safe and tucked
away at all times. You yourself are the only one responsible for the safety of
your funds.
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