A crypto custodian is a third party who crypto owners entrust with the custody of their own digital coins. Before buying any cryptocurrency coins, it is essential to consider the best way to store and transact safely. Most crypto investors might opt to keep their own coins while others may assign a third party to keep custody of their cryptocurrency.
Similar to asset custodians or bank accounts in traditional financial spaces, custodians are temporarily trusted with cryptocurrency as a way of protecting one’s coins from theft, muggings, or any form of loss.
Who is a Crypto Custodian and What’s their Role?
Crypto custody is the process of safely keeping digital assets from theft or loss. This process helps save assets in crypto wallets secured by respective owners, whether individuals or institutions. After the rise of crypto muggings, a valid solution was needed to prevent theft and keep investors from going bankrupt. This explains why there is a need to introduce a third party, a crypto custodian, to help lessen this catastrophe.
Therefore, a crypto custodian is hired to look after specific assets from clients who save on crypto wallets. They act as watch guards for your coins or virtual assets. They use hot and cold storage to protect savings. Hot storage is used by investors who save their assets online, while cold storage is used for those storing their assets offline. In both cases, the goal is to ensure that no cent goes out of the owners’ accounts to muggers or cyber thieves.
When the owner wants their assets back, they can only achieve that using a multiple approval approach known as multi-signature. This is considered safe because users are allowed to use a specific method. It also creates a barrier that crypto muggers cannot surpass easily.
The Benefits of a Crypto Custodian
With more than 100 crypto custodians in the market, every crypto investor needs at least one. While there are more prominent companies that offer crypto custody, there are many counterfeit ones that aim to steal assets. This calls for caution to all investors looking for a reliable crypto custodian.
Thus, before trusting every available entity it is essential to keenly look at their reviews. Some entities such as legal crypto banks have shown resilience in their job to keep their investors safe. Nevertheless, consider the following benefits of hiring a reliable and professional crypto custodian:
There’s Increased Security
When investing in a crypto custodian, your main aim is to secure your assets and increase your savings. Crypto custodians serve this purpose by ensuring you secure your investments most safely. This process also increases your chances of multiplying your assets safely with less fear of getting mugged. Once you select a reliable crypto custodian, you will hold them accountable for any issues with your account. At least you have someone or an entity to question in case things go sideways.
Generally, about $10b is lost to crypto muggers who steal from different people, sometimes rendering them completely bankrupt. Saving on crypto is a milestone, so getting from up there to seemingly nothing can be detrimental. The more you save on crypto, the higher the chances of losing more assets. Nevertheless, employing a crypto custodian helps you escape this hurdle of worrying about your investments and their unsafety.
It Reduces the Risk of Getting Your Assets Stolen
As discussed, crypto custody helps prevent the theft of individual companies’ crypto assets. Moreover, continuous use of these custodians will save your assets and open more opportunities for security to your assets in a digital platform. This effect is felt deeply by many large financial institutions like crypto banks, who expect more safety of their assets than individuals. This marks some level of trust between the two parties because your assets are in safe hands.
It Offers Simplified and Convenient Transactions
Including a third party in financial situations is a tough decision, especially when you have trust issues. However, from a positive point of view, using this approach means less work. You will advocate instructions to the selected third party and only conduct transaction activities such as buying, selling, or even paying for goods online.
The crypto custodian will handle matters such as keeping track of private keys for all your assets. With them at work, you won’t have to worry about losing your account to crypto muggers or cyberbullies.
Crypto custodians will also help you with technical skills to frequently maintain tight security. The issue of simplicity and convenience is mostly experienced by huge investors like banks or established financial institutions. Research indicates that such companies grow more rapidly than those that spend more time tracking, where they end up spending more money. Nevertheless, the worst is one who does not track at all, exposing their assets to crypto threats.
Are Crypto Custodians Necessary?
Looking at the benefits they’ve achieved in the crypto industry, it’s no doubt they are necessary. Everyone is entitled to a safe and fair savings account, and crypto saving is no exception. Crypto custodians have done what initially couldn’t be achieved; protect people’s assets on crypto. Both individual and institutional investors witness the benefit of using crypto custodians.
Crypto custodians can now foray into this new challenge and manage their customers’ assets for safe custody. Investors who save in crypto wallets have achieved a milestone so far, so time is limited to check on their assets regularly. Crypto custodians make work easier for such individuals by helping them to keep track of any insecure information to protect their assets.
Every crypto asset owner dreams of having their assets safely kept while aiming to achieve more from savings. Nevertheless, this is sometimes impossible with the prevalence of crypto thieves. They use the most untraceable methods to illegally obtain assets from innocent crypto investors. That’s why every investor in crypto wallets needs a third party to help them secure and safeguard their assets. This article outlines why everyone needs a crypto custodian to help secure and save assets from crypto thieves. This is necessary since the benefits outweigh the loss that comes with getting your assets stolen. However, there’s more to choosing a reliable crypto custodian than just selecting anyone.
Other Articles you May be Interested in: