Understanding Custody
In the financial world, custody refers to a safeguarding service provided by a financial institution to protect a customer’s securities.
The institution responsible for custody is known as a custodian.
They collect dividends, interest, and profits from security sales on behalf of the customer and distribute funds according to the customer’s instructions.
Evolving Custody
Over time, custody has evolved from a personal relationship to an interaction with highly regulated institutions.
This has introduced a new level of financial complexity, separating banking from everyday life.
Safeguarding Funds and Driving Financial Services
Modern custodians retain customer funds and utilize the assets to lend them out for their gain.
They play a crucial role in the financial ecosystem, providing services ranging from onboarding new clients to offering advanced trading tools for experienced users.
At the institutional level, many firms specialize in asset storage and management, some of which are insured to protect clients in the event of financial loss.
Balancing Security and Control
In the blockchain world, third-party cryptocurrency exchanges commonly offer custodial solutions.
These exchanges hold their users’ private keys and crypto assets (e.g., Bitcoin and Ethereum).
Custody of cryptocurrencies is entirely controlled by the crypto exchanges, which implement security measures to protect users’ digital assets from theft or unforeseen losses.
In the event of a hack or theft, the custodian (crypto exchange) is fully responsible for refunding affected users.
Importance of Cold Storage for Cryptocurrency Holdings
While cryptocurrency custodians provide a convenient way to store digital currencies, users should exercise caution and consider keeping a significant portion of their holdings in cold storage if they are not actively using or planning to use them soon.
This practice helps mitigate the risk of hacking incidents that may occur on custodial platforms.
For more information, see our curated list of the best cold storage wallets.
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Ledger Nano S Plus is a fortress-like protection for your digital wealth, sporting an affordable price point. This crypto wallet supports many cryptocurrencies and blockchain networks, making them easily managed via the reputable Ledger Live app. Despite its significant advantages, some users have noted the lack of storage capacity.
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Support for up to 5,500 cryptocurrencies.
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Private keys are always offline.
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Integration with other hot wallets.
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Support for staking.
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NFT support.
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High fees for Ledger Live crypto purchases.
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Limited app space.
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Small display.
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Arculus is an innovative cryptocurrency hardware wallet that safeguards users' crypto private keys. It stands out with its sleek metal card design, using Near-Field Communication (NFC) to store crypto private keys securely. With robust layers of protection, it ensures no unauthorized access to the stored keys.
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Digital passports and banking cards.
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In-app crypto purchases.
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Three-factor authentication and biometrics.
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Free crypto deposits and withdrawals.
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WalletConnect for DeFi and NFT support.
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Limited crypto support.
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Only USD and EUR are supported.
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High fees on crypto purchases.
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Ngrave Wallet provides utmost security and a user-friendly experience. Its offline functionality, EAL7-certified OS, multi-crypto support, intuitive interface, and robust security make it a top choice for secure crypto asset management.
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Advanced security features.
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Interface with a 4-inch touchscreen.
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Over 1000 cryptocurrency support.
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Trusted certification (EAL7).
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Limited support for decentralized finance (DeFi).
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Higher price range compared to other wallets.
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Lack of Bluetooth and NFC connectivity.
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The Trezor Model T is a high-quality hardware wallet that offers top-notch security for cryptocurrency investors. Trezor is known for its transparency and trustworthiness. The ability to store 1500+ tokens and Non-Fungible Tokens (NFTs) justifies the premium price of $219. However, some users have reported issues with the MicroSD card slot. Trezor Model T is a solid pick to safeguard crypto despite minor concerns.
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It supports 1400+ crypto assets.
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Touch screen for a user-friendly operation.
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It supports NFTs storage.
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Too expensive when compared to its competitors.
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It has limited mobile compatibility.
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A bulky design that is quite hard to carry around.