What Are Crypto Custody Services?
Crypto custody services are storage solutions for cryptocurrencies. These are safe and secure third-party solutions to store your digital tokens. Let us take a look at what crypto self-custody solutions are and what distinguishes crypto wallets and crypto custody services.
Crypto Self-Custody Solutions
A self-custody solution is the best option for someone who wants complete control over their digital assets. They enable this via the use of a private key. You can store your funds in software or hardware wallets. Of which, software wallets include online wallets, mobile wallets, and desktop wallets, and hardware wallets are ones where the private key is stored on a hardware device.
Having complete control over your funds comes with its own share of risk. As there are no crypto exchanges or government entities involved that overlook the funds, no one can come in to help in the case that the private key gets lost.
Crypto Custody Services vs. Hot and Cold Wallets
Both cryptocurrency custody services and crypto wallets are used to store digital tokens safely. While it means crypto wallets are for everyone, crypto custody services are mainly intended for those wanting to hold large funds and for institutional investors.
Hot wallets are crypto wallets that are connected to the internet and are prone to cyber-attacks. While cold wallets are offline crypto wallets that are more secure. But in terms of accessibility, hot wallets are easy to access frequently as compared to cold wallets. And some of the best crypto custody services are those that utilize a combination of both hot and cold wallets.
The main concerns are the safe storage of private keys and maintaining their backups. Crypto custody services are very helpful in this matter. These crypto custodians deploy measures to improve the integrity and confidentiality of private keys and their backups.
Final Thoughts
Cryptocurrency custody services are used to store digital tokens. They are different from crypto wallets in that their usage is mainly for storing large funds and is intended for institutional investors. Often, crypto custodians use a combination of both hot and cold wallets for storage.
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