What is a Non-Custodial Wallet?

Digital asset wallets are generally divided into two types: custodial wallets and non-custodial wallets. To understand the difference, it’s important to first understand how crypto wallets work. Crypto wallets do not actually store a user’s funds. Instead, they store public and private keys. The public key enables users to set up transactions, while the private key authorizes them.

Custodial Wallets vs. Non-Custodial Wallets

• Custodial Wallets In a custodial wallet, a third party manages the private keys on behalf of the user. This means the third party has full control over the digital assets and is responsible for managing wallet keys, signing transactions, and protecting the user's assets.

• Non-Custodial Wallets A non-custodial wallet gives full responsibility for managing digital assets to the owner. Users have complete control over their digital assets, manage their private keys, and handle transactions independently. Non-custodial wallets usually provide users with a recovery phrase. This phrase can generate the public and private keys and acts as a backup or recovery mechanism. However, anyone with access to the recovery phrase can fully control the assets in the wallet.

Advantages of Non-Custodial Wallets

1. Complete Ownership and Control Users retain full control of their digital assets, ensuring that no third party or individual can interfere.

2. Offline Key Storage Private keys or recovery phrases can be stored offline, providing secure asset ownership and safety in physical environments.

3. Direct Blockchain Transactions All transactions occur directly on the blockchain without involving intermediaries, ensuring security and authenticity.

Challenges of Non-Custodial Wallets and Cregis’ Solutions

Challenge 1: Managing Recovery Phrases and Private Keys

Users must safeguard their recovery phrases and private keys. If lost or stolen, users may lose access to their assets permanently.

Cregis’ Solution: Through MPC (Multi-Party Computation) technology, Cregis eliminates the need for users to handle raw private keys or recovery phrases during daily operations. This innovative approach combines MPC with recovery phrases, ensuring users retain full control of their assets while removing the risks associated with private key exposure. Even if the recovery phrase is lost, users can securely transfer assets to another device using MPC shard technology without relying on the original private key.

Challenge 2: Complex User Interaction

Traditional non-custodial wallets often have a steep learning curve, making interactions cumbersome for users.

Cregis’ Solution: Cregis streamlines the user experience with a user-friendly and intuitive interface, simplifying interactions and eliminating complexities, allowing users to manage their assets efficiently and securely.

By combining the strengths of non-custodial wallets with advanced MPC technology and threshold signature schemes, Cregis provides a highly secure, efficient, and user-friendly solution for digital asset management.