How does self custody work in crypto?
By having the private keys to their crypto wallet, an individual has full control over the digital assets they own and are able to access them whenever they want. You manage your wallet yourself and do not use a third party. Quite simply, you are the only one who has access to your cryptocurrency.
In spite of what many people might think, many secure financial institutions are not self-custodial. By holding the user’s cryptocurrency on their platform, these institutions act as intermediaries and have access to it. For example, Coinbase is a popular cryptocurrency exchange that holds its customers’ funds, meaning users don’t have complete control over their own cryptocurrency.
What are the benefits of crypto self-custody?
In order to keep their assets secure, investors need crypto self custody and true ownership. You have little knowledge and control over how your crypto is managed when you entrust a third party with them. This is like leaving your keys on the street and hoping your door will stay locked. You may think everything is okay for the time being, but eventually your safety and security will be compromised.
By taking self custody of your crypto assets, you are able to maintain control over your assets and make sure they are secure. This is why it is important for investors to understand the importance of crypto self custody and take steps to ensure that their assets are properly managed and secure. The saying goes, “If it’s not your keys, it’s not your crypto!”.
How does a self-custody crypto exchange work?
With a self-custody crypto exchange like C3, users have total custody, control, and access to their crypto assets.
C3 sends crypto directly from the seller’s self-custodial crypto wallet to the buyer’s. Since the exchange does not hold the crypto during the transaction process, crypto trading is faster, cheaper, and more secure. This ensures that the seller retains full control over their crypto throughout the entire transaction, thus mitigating potential risks associated with custodial services.
The crypto market is currently dominated by centralized exchanges. The assets of their users are held in centralized wallets, which makes them less secure. Investors’ funds can be lost in the event of an exchange hack, insolvency, or mismanagement.