What are the differences between self-custody and third-party custody for cryptocurrencies?

3 answers

• Nov 24, 2021 · 3 years ago
  Self-custody and third-party custody are two different approaches to storing and securing cryptocurrencies. With self-custody, individuals have complete control over their digital assets and are responsible for their own security measures. This typically involves using a hardware wallet or a software wallet where the private keys are stored locally. Self-custody provides users with a higher level of control and privacy, as they are not relying on a third party to safeguard their funds. However, it also means that users bear the full responsibility for protecting their assets from loss or theft.
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• Nov 24, 2021 · 3 years ago
  On the other hand, third-party custody involves entrusting the storage and security of cryptocurrencies to a trusted third party, such as a cryptocurrency exchange or a custodial service provider. This approach is often more convenient for users who prefer to delegate the responsibility of securing their assets to professionals. Third-party custody can offer additional features like insurance coverage and recovery options in case of lost or stolen funds. However, it also introduces a level of counterparty risk, as users are relying on the security practices and integrity of the custodian. It's important to carefully evaluate the reputation and track record of any third-party custodian before entrusting them with your cryptocurrencies.
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• Nov 24, 2021 · 3 years ago
  At BYDFi, we offer third-party custody services for cryptocurrencies. With our custodial solution, users can benefit from the convenience and security measures implemented by our team of experts. We utilize industry-leading security protocols and regularly undergo audits to ensure the safety of our users' funds. Our third-party custody service provides peace of mind for users who prefer to have their cryptocurrencies stored and secured by a trusted and reputable custodian. However, it's important to note that self-custody remains a viable option for those who prioritize full control and privacy over convenience.
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