Autonomous Custody

With this kind of custody system, you can manage your crypto in complete autonomy and in a very safe way. These are offline custody systems, so-called cold wallets. They are not connected to the Internet and come in the form of a flash drive or a sheet of paper.

Paper wallet

One of the safest ways to store your cryptocurrency is to write your private key and public address on a piece of paper and hide it in a safe. Or you can print out the Paper Wallet when you create the keys on a website like Bitcoin Adress.

A somewhat vintage but definitely functional method.

Pros

  • Maximum safety
  • You can receive bitcoins and other cryptocurrencies by providing just your public address to whoever sends them to you.

Cons

  • You can’t send cryptocurrency with it. To be able to use your cryptocurrency you need software that creates and authorises transactions, i.e. a software wallet or an exchange. With the private key stored in the paper wallet, the software wallet authorises the transaction of a certain amount of cryptocurrency from the corresponding public address.
  • If you lose your paper or key, you will not be able to recover your private key in any way.
  • You cannot mine bitcoin with it.

Conclusion

Cold wallets are therefore proper cryptocurrency “safes“, where you can keep most of your funds.

Partial Custody

Partial custody is adopted by investors who want to be able to access their funds on a regular basis. In this case, the combination of cold and hot storage is optimal. Several companies, including exchanges, offer custody services.

Differences with Autonomous Custody:

  • To access your funds, you need to use your email and password.
  • Your funds are connected to an account, like on any online platform.
  • At the time of registration, personal data such as first and last name are requested.

The most regulated exchanges also ask their users to verify their identity, this is called the Know Your Customer (KYC) procedure. This way, they guarantee to their community that the people active on the platform are real and traceable people and that no illegal activities are being carried out.

Pros

  • The internet connection guarantees the immediate processing of any operation and transaction.
  • You can buy and sell cryptocurrency with fiat currency (euro/dollar) or with crypto. You, therefore, have immediate access to liquidity.
  • In case you lose your access data, the platform can recover your account and therefore your cryptocurrencies.

Cons

  • Both the exchange and your account may be subject to hacker attacks due to online exposure.
  • It is advisable to carefully evaluate the platform you rely on to avoid fraud.
  • The private key is created and managed by the exchange platform and is not in your exclusive possession.
  • You are required to give the platform managers your personal data.

Conclusion

The partial custody provided by exchange platforms is ideal for those who want to trade and often monitor their investments.

 

Institutional Custody

Third-party managed custody solutions allow customer funds to be held and managed entirely by a custody provider. The service provider conducts all operations according to the customer’s instructions.

Service Level Agreements (SLAs) stipulate the terms and times of storage, access and movement of customer funds by third parties.

Third-party custody is the most suitable solution for large investors and institutions such as asset managers, hedge funds and/or high net worth individuals. They are the only cryptocurrency security solutions that offer the same level of protection as banks, with all types of security and control measures.

One possibility is also to use multiple third parties (this is called “full-custody” or “wallet-plus”) if you want two or more suppliers involved to verify instructions and move funds.

Among the suppliers of institutional custody we recommend: