Crypto

Knowing The Concept of Custody In Cryptocurrency And Their Types

To make digital investments safer as well as easier, new virtual currency custody options are emerging every day. The cryptocurrency market has approached the point of inflexion in its journey. Earlier, trading in cryptocurrencies was thought to be riskier as well as completely difficult activity. But the demand for digital currencies has been drastically changed over time. This field now has become one of the most spoken and mainstream for investments. Everyone each day gets into this field to gain maximum benefits. People, as well as institutions, are becoming more and more interested in digital currencies. While handling digital currencies there is one crucial aspect that lies, and that is the custody of our assets. We can define custody as a method to preserve, store and move digital assets. If you’re interested to know cryptocurrency investment secrets visit this link.

Types Of Custody

There are three main types of custody that are facilitated to preserve, store or move any digital currencies. They are:

    • Crypto Partial Custody
    • Self-Custody
    • Third-Party Custody

Crypto Partial Custody

Partial custody in cryptocurrency refers to that custody, where a third party also assists in securing digital assets. It is a wallet that is eligible to be managed by itself. In such a case, there might be either a “two-factor authentication” facility or secondly a multi-signature facility that will allow the other party to enter as a party to a transaction.

Self-Custody

Opting for the right custody method varies from individual to individual. For instance, choices of that of an institutional investor or a retailer investor vary from being customized to the hands-off solution. Numerous such options are available when it comes to custody, some may prefer software or hardware wallets while some might prefer an offline mode which is cold storage wallet.

Investors that want to exercise holistic control over their assets might go for a self-custody wallet as that would be best for them. In such a type of custody, the investor will have entire control with the help of the private key which lies exclusively with him and is impossible to be guessed by any other party. When it comes to self-custody there are two main wallets, one is software that includes mobile, desktop or online wallets and the other one is a hardware wallet where your symmetric key is kept safe in such a wallet. Self-custody might give you enticement but it on the other side might also be detrimental since third parties like a bank or an exchange, in an adverse situation would not be able to retrieve your private key when you lose it.

Third-Party Custody

When it comes to security, third party custody is the most preferable one. It is viable for an individual as well as an institution. Several different options are available and one can consider when there is third party custody. For example, if we are looking for quick accessibility, this can be provided by an online or a hot wallet. On the other side if we see a cold storage wallet which is otherwise an offline wallet is not a wallet that can be accessed that quickly since the symmetric keys are preserved in a hardware wallet that has got no internet connection. In such a case there is very little chance of controlling it remotely.

Final thoughts

The topic pertains to the custody of digital assets. The concept of crypto custody has been disseminated along with the different types of custody methods that an investor can opt for. Three such methods are there, out which the one fits well you need can be opted by you.

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Rupesh Kumar

First, I am an online marketing professional, as well as a night time gamer with a wide array of interests. Aside from constantly writing about games, I also enjoy writing about my other hobbies such as fitness, cooking, home DIY projects and travel. Contact me at gamerssuffice@gmail.com

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