Custodial vs ohne Freiheits

Sep 09, 2019

Custodial vs. without freedom wallets

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Foreword

. Despite game-changing and disruptive properties, blockchain still has some hurdles on security issues.

Almost every crypto enthusiast is afraid of losing their because of them. Once lost, the keys cannot be made and you will no longer control the savings, so you will not be able to restore access to your wallet. Such purses are not called deprivation of liberty.

On the other hand. This is the hidden danger of any wallet service that you do not provide with private keys. These folders are called freedom.

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. If the third-party data is hacked, your money will be stolen at high risk.

So let's take a closer look at the custody and freedom wallets to find out all their advantages and disadvantages.

What are custodial purses?

are services and exchanges that the main advantage of the freedom wallets is that you can restore access to your account in case you have lost your password. The bad news is that they can freeze your money on maintenance or due to KYC requirements. There is always a risk that hacker attacks could steal your money in the event.

For example, hackers stole about 700 BTC from one of Bitcoin's most famous centralized wallet: Blockchain.Info

The same trade show for centralized exchanges that is prone to hacking. The exchanges control your assets and can freeze your account without KYC / AML confirmation. (KYC - Know Your Customer, AML - Anti-Money Laundering)

What are non-supervisory wallets?

. The keys are stored in encrypted form on the user's device and never skipped. Your money is under control, but there is also a downside.

For example, if you brake the PC, it is stolen, or if you delete the app, you will be able to recover access only with your seed phrase.

How safely do you store your mnemonic seeds?

The keys are generated by mnemonic seeds. We strongly recommend that you save it in two secure locations on paper. The semen is even more important than the password of your wallet because it generates the keys and provides the data. Save the seeds, write them on a piece of paper, engrave them on a piece of metal, keep them in your safe or give them to your mother. Don't lose the seed under any circumstances!

How to create a wallet that does not deprive you of your liberty