What are the advantages and disadvantages of using custodial and non-custodial services in the cryptocurrency industry?

3 answers

• Dec 15, 2021 · 3 years ago
  Custodial services in the cryptocurrency industry refer to services where a third party holds and manages users' funds. The main advantage of custodial services is convenience. Users don't need to worry about the technical aspects of managing their own wallets and private keys. However, the main disadvantage is the loss of control. Users have to trust the custodian with their funds, which introduces counterparty risk. Additionally, custodial services may require users to go through KYC (Know Your Customer) procedures, which can compromise privacy.
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• Dec 15, 2021 · 3 years ago
  On the other hand, non-custodial services give users full control over their funds. Users hold their own private keys and are responsible for the security of their wallets. This provides a higher level of security and eliminates the counterparty risk associated with custodial services. However, non-custodial services require users to be more technically savvy and take responsibility for their own security. Losing access to private keys can result in permanent loss of funds. Moreover, non-custodial services may have limited features compared to custodial services.
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• Dec 15, 2021 · 3 years ago
  At BYDFi, we offer a non-custodial service that prioritizes user control and security. With BYDFi, users have full control over their funds and can access a wide range of decentralized finance (DeFi) features. However, it's important to note that non-custodial services may not be suitable for all users. Beginners or users who prefer convenience over control may find custodial services more suitable for their needs. Ultimately, the choice between custodial and non-custodial services depends on individual preferences and risk tolerance.
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