What Is a Self-Custody NFT Wallet?
March 23, 2023
TL;DR:
Self-custody NFT wallets are crypto wallets that enable you to store and manage non-fungible tokens (NFTs.) They also give you access to the wallet's recovery phrase, allowing you to secure it with additional measures.
While self-custody wallets offer full control and access to the assets in your wallet, you must also take extra precautions and security measures to ensure their security.
Valora is the perfect self-custody NFT wallet for anyone looking for a user-friendly, secure, and versatile mobile wallet where they can store and secure their NFTs.
When people in the cryptocurrency community talk about a self-custody NFT wallet, they’re referring to a type of digital wallet where users can store and manage their NFTs without the need for a third-party service or custodian.
Meaning that as a user, you’re given complete control over the wallet’s recovery phrase. By doing so, these wallets ensure that your NFTs are safe, secure, and easily accessible.
But how does a self-custody NFT wallet work? What makes it better than custodial alternatives? And what should you (the NFT holder or collector) look for when choosing the best digital wallet for your crypto journey?
We’re about to answer all of these questions (and more) in this guide to self-custody NFT wallets.
Real quick, what are NFTs again?
NFTs, or non-fungible tokens, are digital assets that represent distinct ownership on the blockchain. An NFT can be used to represent any unique digital asset or item that has value. This might range from digital artworks, collectibles, and music all the way to event tickets, virtual real estate, virtual identities, and even digital signatures.
Unlike other digital assets like cryptocurrency tokens, NFTs are all one-of-a-kind items that cannot be replicated. NFTs are secured by blockchain technology, preventing them from being duplicated or tampered with. This makes every NFT individually valuable and unique.
NFTs are revolutionizing the way we look at digital ownership. Not only that, but they’re creating a new paradigm in which investors, collectors, and creators can all freely share their digital creations inside a broader ecosystem.
But in order to buy, store, or collect your NFTs, you’re going to need the right wallet. And there are many types out there that you can choose from!
Types of crypto wallets
Self-custody wallet: With self-custody wallets such as Valora, the user is responsible for the security of their recovery phrase and has complete control over their assets.
Custodial wallet: With custodial wallets, you’re handing over the responsibility for securing your recovery phrase to a third party, also known as a custodian.
Hot wallet: An online wallet connected to the Internet, most often used for quick and easy access to cryptocurrencies and NFTs.
Cold wallet: An offline wallet often used for the long-term storage of cryptocurrencies.
(Keep in mind) Not all crypto wallets can hold NFTs
Most crypto wallets are designed with the intention of holding cryptocurrencies and tokens such as BTC (Bitcoin) and ETH (Ethereum.)
With that said, not all crypto wallets are created equal. Just because your wallet can hold crypto, doesn’t mean it can store an NFT. This is because NFTs have different technical requirements than other crypto tokens.
While the popularity of NFTs is growing rapidly, many mainstream crypto wallets are not yet equipped to handle these unique digital assets.
However, new wallets that are designed to easily store NFTs (such as Valora) are starting to take over.
This is good news for anyone who wants to buy, sell, or trade NFTs, but it can still be a limitation for people who are still using old wallets.
What to look for when choosing a crypto wallet for your NFT collection
Whether you’re a seasoned NFT collector or just purchasing your first NFT, there are certain qualities you need to look for when it comes to the wallet that stores your digital artwork. These include:
Compatibility with your preferred NFT marketplace (or an NFT marketplace native to the wallet)
Security
Friendly user interface
Accessibility on multiple devices
Multi-chain support
Incorporated Exchange
Connections with dapps
Pros and cons of self-custody NFT wallets
While self-custody offers many benefits, such as more autonomy, more privacy, and more security measures, there are also some downsides. Let's break them down so you can make an informed decision on what's right for you.
Pros
You can buy, sell, and trade your NFTs anytime. If you hold your NFTs in a self-custody wallet, you have complete control over your tokens. You can sell them, trade them, and send them to other wallets without having to rely on a third-party intermediary.
Only the owner has access to the private keys. Your keys, your NFTs. If you want to have full authority and responsibility over your private key (recovery phrase), and hence all your cryptocurrency and NFT holdings, self-custody options are the best choice for you.
Cold storage allows offline accessibility. You can still view your NFTs while they’re in cold storage and disconnected from Internet activity. This minimizes any risks of online attacks, hacking attempts, and custodian compromise.
Self-custody wallets do not store sensitive user data. Self-custody NFT wallets do not require users to share any of their sensitive data, ensuring better privacy and security.
Cons
Hardware wallets are typically more expensive. If you’re someone who wants to store their NFTs in cold storage, you probably already know that hardware wallets are typically more expensive. If you’re new to the world of NFTs or you want easy access to your collection at all times, an online wallet like Valora might be a better fit for you.
Owners must take care of their recovery phrase with proper security practices. Your self-custody NFT wallet is like an unbreakable digital safe, and it’s your job to take care of the key. That’s why using strong passwords, keeping your software updated, avoiding public Wi-Fi networks, and taking other security measures is crucial to keeping that key safe and secured.
Pros and cons of custodial NFT wallets
Custodial wallets have their own set of benefits and drawbacks that make them a viable choice. But does the benefit that they're free and accessible make up for the fact that they don't give you access to the key to your digital safe? Let's find out by comparing their pros and cons.
Pros
Users can recover accounts by requesting information from the third party. In a situation where you lose or forget your password, you can request a new password from your custodian since they’re the party that ultimately has control of your assets.
Free to use. Custodial wallets are often free to use and may be linked to either an exchange account or the NFT marketplace in which you’re viewing and trading NFTs. But self-custody wallets like Valora are also free to use - yet give you access to all the benefits of self-custody, such as improved autonomy.
Cons
Users must be connected to the Internet to access their NFTs. Most NFT marketplaces and digital wallets require you to have an Internet connection to view, manage, and exchange NFTs.
The third party holds and manages your NFTs. Trusting your NFTs with a custodian can be a blessing and a curse. Some custodians, such as crypto exchanges or NFT marketplaces, may be vulnerable to security breaches and exploits - so handing off responsibility to a custodian will not guarantee you total security.
User registration and KYC compliance. Many of the most common custodial service providers require users to complete a series of verifications. These may include know-your-customer (KYC) or anti-money laundering (AML) verifications. This requires you to hand over your personal data to the custodian so they can verify your identity.
What is the best self-custody NFT wallet for a beginner?
If you want to store your first (or next) NFT in a wallet that provides you with enhanced security, higher autonomy, and a beginner-friendly interface, a self-custody mobile wallet like Valora may be the best option for you.
“Valora is a self-custody wallet, which means that users have full control over their recovery phrase and can access their cryptocurrency and NFTs at any time.”
Further reading: How to Create a Crypto Wallet
