Are Cryptocurrency Custody Services Different From Wallet?
NDTV
To offer the highest level of security, the best crypto custodians often utilise a combination of hot and cold wallets.
Yes, cryptocurrency is the talk of the town but there remains so much to learn about it. Simply speaking, custody services are storage solutions for your cryptocurrency. This is a safe and secure storage for the much-valued asset. So let's understand what cryptocurrency custody solutions are.
From experts to novices, if there's consensus on one thing about cryptocurrency, it's on the vulnerability of digital tokens. And, while there already are so many solutions, including hot and cold wallets, to address the safety concerns, cryptocurrency custody providers take everything a notch up. In simple terms, these are third parties offering storage and security for your digital tokens.
Now, you must be wondering if they, too, offer the same services as a crypto wallet does, what's the difference? While the wallets are for one and all, the cryptocurrency custody services are primarily intended for institutional investors, including hedge funds, and those holding large amounts of bitcoin or other digital tokens.
Hot wallets are online wallets and remain connected to the Internet most of the time, making them prone to hacks, while cold wallets store your crypto funds offline, which automatically makes them more secure. According to a report in ULAM Labs, to offer the highest level of security, the best crypto custodians often utilise a combination of hot and cold wallets.
