How do Non-Custodial Wallets Work

Non-custodial crypto wallets are a type of cryptocurrency wallet where the user retains sole control of their private keys, which are cryptographic keys that allow them to access and manage their cryptocurrency. This contrasts with custodial wallets, where the private keys are held by a third party, such as a cryptocurrency exchange or wallet service.

Here’s how the Ethos Vault, a non-custodial crypto wallet, works:

1. Private Key Management: When you set up a non-custodial wallet, you are given a private key, which is often presented as a seed phrase (a series of words). This seed phrase can regenerate your private keys, making it crucial to keep secure and private. Ethos makes the process of accessing and / or restoring your Private Keys incredibly easy through its patent-pending Magic Key technology while maintaining the highest levels of security.

For more information, see:
- What are Magic Keys?

2. Transaction Signing: To perform any transaction, such as sending cryptocurrency to another address, the transaction must be signed digitally using your private keys. This process happens locally on your mobile phone.  Since the private key never leaves your device, it is considered more secure against online theft or hacking. Ethos takes this concept one step further.  Ethos Magic Key technology splits your private key into three shards, one of which is kept in an unhackable location on the device itself. A second shard is automatically backed up in the cloud of your choice. The third and final shard is stored on an Ethos server.  All three shards are necessary for an unauthorized party to access your assets making it much safer than seed phrases on a single device.

For more information, see:
- What are Ethos Magic Keys?

3. Direct Control and Responsibility: Because you hold your private keys, you have full control over your cryptocurrencies. This means you can interact with various blockchains to send or receive funds, participate in staking, or use decentralized applications (dApps) without needing any intermediary's permission or trusting any third-party to do this for you.

4. Backup and Recovery: Since there is no third-party custodian, the responsibility for backing up the wallet lies with the User, but Ethos’ Magic Key technology makes this incredibly easy while maintaining the highest levels of security.

For more information, see:
- How do I create a Backup for my Magic Keys?
- What does Backup mean?