A custodial wallet service such as coinbase or Kraken. Custodial wallet service has a hold on the private key of the user. It is his responsibility to safeguard the user’s digital assets and funds. The private key is used while transferring digital currency from one end to another to verify whether the assets are going to the right person or not. Whereas in the case of non-custodial service, the hold of the private key is totally in the user’s control. It is their sole responsibility to take care and safety of their funds. Read on to get piece of detailed information about bitcoin investment.
As Digital assets are being prominent and their availability anywhere in the world among people, several users are looking up for their best moves in the digital exchange market to choose the best tokens to earn benefits. No doubt that several users are familiar with custodial exchanges like Binance, FTX, OKX and last but not least crypto.com whose purpose is to provide exchange services. But if it is about the non-custodial exchange.
Use a Non-Custodial Exchange
While considering the crypto space, you must be aware of the saying” not your keys, not your crypto” which means the unique set of keys which comes with the crypto wallet, gives access to the holder to transfer their cryptocurrency. The person who has the access to the private key can only access the crypto assets related to a wallet address. So it is the responsibility of the users to keep this crypto key safe and secure. That is the main difference between custodial vs non custodial wallet. Each wallet has its benefits so look for what suits you the best.
Using the coinbase or finance services does not mean that they own that digital property for which they have stored a private key. It is the customers who have an IOU from that exchange. The same criteria are applied by the bank as the money saved in your bank account is not yours. The rights to that money are only on the bank. Banks can restrict you from accessing your account or they can deny you to access your funds at any time. An example happened in Canada in 2022 where the government blocked many cryptos and another account of the persons who were protesting against the government.
The Downsides of Custodial Exchanges
The disadvantage of keeping your funds under the custodial service such as for custodial exchange or lending purposes is that you cannot own that crypto. Custodial service providers can deny you access to your funds during the baby’s time and you cannot do anything in protest. We have seen many cases in a crypto regulatory system where people’s accounts were locked out by global regulators.
The other downside of custodial exchange is the lack of liquidity and support from exchange parties. A big amount of exchanges have been done by users through different networks to sell and swap their accounts. Whether users can understand the cleverness behind it or not. They are also not aware of the complexities of exchanging assets cross-chain. However in the case of non custodial services, while exchanging during its peak time, there might be a shortage of liquidity. Due to this, users were not able to exchange their assets and get annoyed while not understanding the reason behind it despite using such a good service provider like Ethereum. The final downside of jobs custodial exchange service is due to lack of additional features.
The services like finance, provide a lot of services like saving, earning, trading different types of assets, accessing launchpad etc, while no custodial services only provide buy and swap facilities to the users.
A Note Before Getting Started
Bon custodial services as mentioned above do not provide any KYC or documentation process to give authentication to swap or exchange services. Although most of the non-custodial services have the right to stop a user’s transaction or ask for their identification if the transaction process is found suspicious. Therefore some extra features must be incorporated. Like a history, an account must be needed to track exchange history records.
Best All-Around: ChangeNow
The additional feature provider app is ChangeNow. This app is made for fast and limitless transactions. This app currently supports 150 cryptocurrencies and is the first decentralised exchange in the world. It has made history. It nearly supports the 500 assets. ChangeNow also provides the facility to provide master cards and visa cards and enables users to purchase crypto instead of exchanging their assets all time.
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