Custody or non-custody: Know the difference

Custody vs non-custody crypto services, what's the difference?

Education would continue to be a key fundamental for anyone who would want to engage in the blockchain technology and cryptocurrencies space. This is a result of the ever-evolving dimensions of blockchain technology. The growth of cryptocurrency has been a formidable phenomenon in recent times, especially with additional emphasis on trust and security. In addition, the demand for regulations and standardized operations is also increasing in the crypto ecosystem as individuals and companies are concerned about how their funds are kept safe from hackers and online thieves.

In recent years, there have been a growing number of approaches for storing and managing digital assets, including cryptocurrencies. To ensure the security of your funds, it is important to distinguish the type of custody to deploy and this is where you would find modern crypto custody services, which are basically independent storage and security systems for cryptocurrencies. 

Custody in the case of crypto assets is a broad term with the availability of many solutions. You can discover many unique choices for storing crypto assets and ensure all-around access to your crypto assets. However, you should also consider the value of crypto custody solutions and the challenges associated with them. 

In reality, any solution offering you the custody of crypto assets, such as a crypto wallet, does not store your actual cryptocurrency. On the other hand, the custody solution providers of your choice would store the private keys for you. The custody solutions such as the wallets platform could also help you manage your cryptocurrency effectively with direct access to your private keys. So in basic terms, the following differentiates between public and private keys.

  • Public keys are basically a long numeric code associated with a specific wallet or custody solution. Where It serves as the address of the custody solution and should be paired with the right private key for executing transactions. 
  • Private keys, on the other hand, are randomly generated binary numbers, which can help in encryption and decryption of transactions. The private key helps in unlocking and verifying a transaction. This is always advisable not to be shared with anyone and should be kept very safe. So that the individuals do not lose their funds as a result of theft. 

There is always the challenge of determining what forms of custody to apply for the safety of funds in the crypto space, however, it is pertinent to note that there 3 fundamental ways to keep your money safe 

  1. One of the foremost options for individual crypto custody solutions would obviously refer to self-custody solutions. Take control over your crypto assets with either a hardware wallet, software wallet or a paper wallet according to your convenience. Self-custody solutions for crypto help you use hardware, software, or paper for storing the private keys to your crypto assets. The advantages of self-custody solutions include better security and improved control over your assets. However, you have to take on the responsibility of your asset alongside the vulnerabilities of hacking and asset loss. 
  2. The next common type among cryptocurrency custody solutions is the exchange wallets. Exchange wallets are basically the solutions in which investors allocate the control and management of private and public keys to exchanges. However, investors would enjoy seamless access to their public and private keys through an online wallet.
  3. The final type of entry among crypto custody services would refer to third-party custodians. These service providers store digital assets on behalf of customers and can easily qualify as third-party custodians. However, third-party custodians offer the facility for including custom-defined features and controls for controlling management of the asset. 

Klever wallet, which is a decentralized P2P wallet system, allows its users to be their own bank as well as offering a superior security system, which limits the potential for hackers and wallet vulnerabilities in comparison to other crypto wallets. When it comes to the safety and security of your wallet, it is a responsibility you should take very seriously. 

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Disclaimer: This article is for informational purposes only. The information does not constitute an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Klever.Finance does not provide financial, tax, legal, or accounting advice. There is no responsibility on the part of the company or the author for any loss or damage arising from or related to the use of or reliance on any content, goods or services mentioned in this article.

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