What is crypto custody & how does it work?

Crypto custody is a secure, off-chain storage solution that protects crypto wallet funds or holdings from theft or loss. Hedge funds, governments, and institutional investors use cryptocurrency custody services to protect large amounts of digital tokens. Wondering whether cryptocurrency wallets and custody solutions are the same thing? They aren’t.

Why are crypto custodians important?

Crypto custodians are essential for the widespread adoption of digital assets. To this day, many institutional investors stay away from buying digital assets because of the lack of security.

What is a self-custody solution?

For those seeking complete control over their digital assets, a self-custody solution might be the best choice. This option affords you complete control of your cryptocurrency via a personal private key — a well-formed and unguessable number that grants you access to your assets.

Should you hold cryptocurrencies in third-party custody?

Although holding cryptocurrencies in third-party custody could be a safer option if you’re scared of losing your private keys, it prevents users from having some flexibility in regards to their assets, and the risk of getting locked out of the funds exists.