Skip to main content

Non-Custodial Storage of Cryptoassets

In the previous section, we examined a model in which control over private keys is delegated to a third party. The alternative is non-custodial storage — a model in which the user independently controls their keys.

Non-custodial storage refers to a method of managing cryptoassets in which private keys remain exclusively under the owner’s control, and access to assets does not depend on the infrastructure of an intermediary.

Under this model, the user interacts directly with the blockchain through a software or hardware wallet.

Where the Non-Custodial Model Is Used​

Non-custodial storage is widely used across the crypto economy and decentralized applications.

Common software wallets include:

  • MetaMask — a browser-based and mobile wallet designed for Ethereum and EVM-compatible networks,
  • Trust Wallet — a mobile multi-chain wallet,
  • Phantom — a wallet built for the Solana ecosystem.

Such wallets allow users to generate their own seed phrase, store private keys, and sign transactions without involving intermediaries. No registration with a centralized provider is required. Control over assets is exercised exclusively through cryptographic keys. All sensitive data (private keys and seed phrases) is stored locally on the user’s device (computer or smartphone) in encrypted form. Users may also export this data and store it on another device or on paper as a backup.

Hardware Wallets as a Special Case​

A distinct form of non-custodial storage is represented by hardware wallets. These are dedicated devices in which private keys are isolated from the primary computer or smartphone.

Hardware wallets fall within the non-custodial model, as control over keys remains with the user. Their architecture and security features are examined in greater detail in a separate section.

Why Non-Custodial Storage Aligns with Blockchain Architecture​

Blockchain systems were originally designed to function without reliance on trusted intermediaries. The non-custodial model logically aligns with this architecture: users independently authorize transactions and bear responsibility for safeguarding their keys.

Under this model, counterparty risk related to a provider’s financial condition does not arise. No centralized organization can freeze funds or restrict operations without access to the private key.

From the perspective of decentralization principles, non-custodial storage embodies the concept of direct and independent control over assets.

Advantages of Non-Custodial Storage​

The non-custodial model offers several fundamental advantages:

  • full and direct control over assets,
  • independence from the financial stability of third parties,
  • resistance to centralized asset freezes,
  • greater resilience to regulatory restrictions,
  • alignment with decentralization principles.

This model is particularly common among users focused on long-term storage or active participation in decentralized protocols.

Risks of Non-Custodial Storage​

Transferring full control to the user also means transferring full responsibility.

The primary risk is the loss of the private key or seed phrase. Blockchain systems do not provide a recovery mechanism. Loss of the key results in irreversible loss of access to assets.

Additional risks include:

  • improper backup storage,
  • phishing attacks,
  • malicious software,
  • device compromise,
  • signing incorrect transactions.

Unlike the custodial model, there is no support service capable of reversing a transaction or restoring access.

The Balance Between Control and Responsibility​

If custodial storage emphasizes convenience and reduced technical burden, non-custodial storage emphasizes autonomy and independence.

Users gain the highest level of control while simultaneously assuming all operational risks. The distinction between the two models therefore lies not only in technical architecture but also in how responsibility is allocated.

Conclusion​

Non-custodial storage represents a model in which users independently manage their private keys and interact directly with the blockchain.

It provides a high degree of independence and control but requires strict adherence to security practices. Loss of private keys or seed phrases under this model results in permanent loss of access to cryptoassets.

The choice of non-custodial storage depends on the user’s willingness to assume responsibility for securing their own funds.