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.
What's the most important thing to keep in mind as far as the security of your crypto funds is concerned?
Well, the primary responsibility, no matter how small or large your funds, is to protect your private keys and backups. Not just that, the private keys and backs must be kept separately to protect them from any harm internally as well as externally. And that's where professional crypto custodians may help a great deal. They deploy special security measures against the d risk concerning the confidentiality, availability and integrity of the private keys and their backups.