Understanding Custodial and Non-Custodial Wallet Using IvoryPay
Wallets are essential to holding assets and conducting transactions in cryptocurrency. Still, the users have to negotiate between comfort and security when choosing a wallet for storing their digital assets.
TL;DR
- There are two broad categories of wallets in cryptocurrency — custodial and non-custodial wallets
- Custodial wallets offer users comfort and ease when conducting transactions
- A non-custodial wallet could be more secure than the custodial wallet
Custodial Wallets
A custodial wallet simply refers to a crypto wallet whose control is not in the hands of the wallet owner. This type of wallet is commonly used by centralized crypto exchanges where users’ accounts are created with ready-made wallets. Custodial wallets come with the ease of trading; account owners need not worry about keeping their seed phrase or private keys as what they need to access their funds is their account log-in details (usually email and password).
Popular exchanges like Binance, Kraken, and Coinbase are known to offer custodial wallets to users
The good thing about this type of wallet is that users can easily use them to conduct transactions on the crypto exchange. The smart contracts capabilities on the platform simply handle all the tedious processes of providing wallet addresses and allow users to concentrate on their transactions.
Non-custodial Wallets
As opposed to custodial wallets, non-custodial wallets give users maximum control over their digital assets. This type of crypto wallet is not hosted on centralized exchanges and in most cases, they are often used to conduct transactions on decentralized exchanges.
A non-custodial wallet could be anchored as a browser extension (like phantom and metamask) or could be a desktop wallet. For a user to use this wallet for transactions, they will have to connect it to the platform where it is to be used before they can conduct such transactions.
The backlash for this type of wallet is that the automatic pairing that centralized exchanges enable is not possible. The entire connection process has to be done by the user.
IvoryPay and Crypto Transactions
In some way, IvoryPay operates both custodial and non-custodial wallets, but the usage depends on the user. All IvoryPay partner businesses will have access to custodial services operated by the platform. First, partners by the virtue of using IvoryPay’s payment gateway, automatically own a dashboard where they can keep track of their revenues.
IvoryPay helps these businesses accept payment and maintains their dashboard where they can see the aggregate of all transactions. Partners can then choose how what to do with their funds — they can choose to withdraw funds to a crypto wallet address, to a local bank account, or even stake a portion in the IvoryPay staking pool.
On the other hand, IvoryPay does not hold funds for users. Users who wish to purchase the IVRY token can do so to their respective wallet addresses. They can also use the tokens to complete transactions on partner platforms. In this case, they will have to connect their crypto wallet to the Ivory payment gateway on the partner platform.
Conclusion
As a user, you will be constantly faced with making a decision between comfort and control when choosing a crypto wallet type. On IvoryPay, the roles have been laid out and users have absolute control over their digital assets, though you could choose to stake them and momentarily place them in our custody, just like our partners do.
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