In the world of cryptocurrency, security is paramount. One way to enhance the security of your Monero holdings is by using a self-hosted XMR wallet. A self-hosted wallet, also known as a non-custodial, self-custodial, or “unhosted” wallet, is a wallet where the owner has complete control over their private keys. Let us explore the key advantages of using non-custodial Monero wallets to understand why these are great options for Monero users who value independence and security.
They provide enhanced security.
Self-hosted wallets provide enhanced security because the user has complete control over their private keys. Private keys are essentially a secret code that allow you to access and manage your digital funds. With a self-hosted wallet, your private keys are stored on your device rather than on a third-party server. You are the only one with access to your private keys, making it much harder for hackers to steal your funds.
In contrast, when you use a custodial wallet, such as one in a centralized cryptocurrency exchange, the private keys of the user's XMR are stored on the exchange's servers, rather than on the user's device. The exchange has control over the user's funds, and the user must trust the exchange to keep their funds secure. While custodial wallets are convenient for beginners or those who do not want to manage their private keys, they are considered less secure than self-hosted wallets.
“Unhosted” wallets also provide users with the option to store their funds offline, known as "cold storage." Cold storage involves storing your private keys on a device that is not connected to the internet, such as a hardware wallet or a paper wallet. This makes it nearly impossible for hackers to steal your funds because they cannot access your private keys online.
They provide additional privacy.
Self-hosted wallets provide users with greater privacy because they do not have to share their personal information with third-party wallet providers. Additionally, transactions can be made directly from the user's wallet, rather than going through a third-party server, increasing anonymity.
Using a custodial wallet can compromise some of the privacy features of Monero. When you use a custodial wallet, your transaction details may be stored on a third-party server, which can potentially be accessed by outside parties. Many custodial wallet providers require you to provide identifying information, such as your name and address, to use their services, which can compromise your privacy.
Using a non-custodial XMR wallet can help to preserve your privacy. When you use a self-hosted wallet, your transaction details are not stored on a third-party server. There is no outside party that can access your transaction data. Self-hosted wallet providers generally do not require you to provide identifying information to use their services, which helps to preserve your anonymity.
You control your funds.
With a self-hosted wallet, users have complete control over their funds. They are not relying on a third party to keep their funds safe and can choose to store their funds offline for added security.
When you use a custodial wallet, you are essentially entrusting your funds to a third-party provider. You must rely on the provider to keep your funds secure and you have limited control over how your funds are managed.
An “unhosted” Monero wallet allows you to have complete control over your funds. You are the sole owner and custodian of your funds, and you can manage them as you see fit. You can choose to store your funds offline in cold storage for added security, or you can transfer your funds to another wallet or exchange any time.
They offer flexibility.
You can choose the wallet software that best suits your needs and preferences with a self-hosted wallet. Several Monero wallet software options are available, each with unique features and capabilities. Users can also use them on various gadgets, including desktop and mobile devices. You can access your funds and manage your wallet from anywhere, anytime. You are not limited to using a specific device or platform, which can be especially useful if you frequently travel or use multiple devices.
You incur fewer costs.
Non-custodial wallets are often free or have lower fees than third-party wallets, making them a more cost-effective option for managing your Monero funds. It is important to note that while self-hosted wallets are generally less expensive than custodial wallets, there may be other costs associated with using them. You may need to purchase a hardware wallet or other devices to store your private keys securely, or you may need to pay for additional security measures, such as a virtual private network (VPN), to protect your transactions and communications.
You can have peace of mind by using a self-hosted wallet, enjoying these benefits while maintaining complete control over your funds and financial privacy.
