The digital evolution of the financial system has allowed different actors to consider cryptocurrencies as an alternative way to pay for the services. For businesses, it is essential to be knowledgeable about the best ways to store crypto assets and keep them secure. Here you can face the decision you need to make: whether to use a custodial or a non-custodial wallet. Both options have pros and cons, so the best thing you can do for your business’s financial blueprint is to realize the distinction between them and determine which one is best for you.
Custodial Wallet
A custodial wallet is a kind of crypto wallet where a third party, like a payment gateway, holds and manages your private keys instead of you. It is easy to use such a wallet type, as there is no necessity to deal with managing the security of your funds. Custodial services such as NOW Wallet are the best solution for your business, as they allow you to store, receive, and convert cryptocurrencies while you do not have to think about the challenges of key management.
Key Advantages and Disadvantages of Custodial Wallets
Here are the main advantages of custodial wallets:
- Ease of use
- Support 24/7
- Opportunity to decrease fees
Using a custodial wallet, you receive simplified management. You no longer have to worry about keeping your private keys safe, the custody provider is doing it for you. NOWPayments, as a payment gateway that provides a custody solution, is able to offer a recovery feature, with the help of which your assets can be retrieved, even in the case when you forget or lose your private key. Moreover, you can get around-the-clock service to solve any possible issues. Besides that, custody solutions have a possibility to decrease fees for you by turning on mass payouts and lowering networking costs, which can be profitable for your business.
Here are the main disadvantages of custodial wallets:
- Risk of hacks
- Regulatory pressures
- Higher Fees
In contrast, a custodial wallet can expose you to the risks of security breaches as you entrust your wallet to a third-party provider. Furthermore, it is possible that you could have limited access to your assets for the reason that custodial solution providers are liable to legal constraints. Finally, a custodial wallet may charge higher fees, particularly if you use custody for such transactions like withdrawals.
Non-Custodial Wallet
While a custodial wallet is taken care of by the payment provider, a non-custodial wallet allows you to be in charge of the private keys completely. Such a kind of wallet shifts responsibility straight to your hands, where you are to hold your public keys and take care of the funds to make sure they are secure on your own. Although it provides you with greater freedom in managing your assets, there is a higher risk if you happen to lose your private keys.
Key Advantages and Disadvantages of Non-Custodial Wallets
Here are the main advantages of non-custodial wallets:
- Full ownership of assets
- Anonymity
Mainly, a non-custodial wallet is advantageous because you can have full control over your assets. In this situation, you are the only person who takes care of your private keys. However, you get enhanced privacy and anonymity instead.
Here are the main disadvantages of non-custodial wallets:
- Risk of losing access to the private keys
- Security awareness required
- No customer support team to assist
A non-custodial wallet has its own flaws. You need to be extra careful because if you lose your keys, you also lose access to your funds for a period of time. Moreover, if you are a newbie, you need to be highly security aware. Lastly, you have support assistance in case something goes wrong.
How Custody Can Help You Save on Fees
The main thing you can do with custody is to save on transaction fees. Payment providers like NOWPayments can offer you a mass payouts solution where you can carry out the payments to many addresses at the same time. This way custodial wallets become an ideal choice for merchants with a high volume of payments. By storing assets in custody, businesses can save up on minimized fees. With NOWPayments, you are able to save up on fee-free USDT TRC20 deposits for new partners.
Best Crypto Custody Solution for Businesses
NOWPayments is the best payment provider with a custody solution available for any of your businesses’ needs. It is a custodial service that has such features as security measures, cost-effective fees, and full control over your funds in crypto. NOWPayments Custody allows you to receive, convert, and store your assets in the best way possible while keeping and managing your private keys in a safe place. Your funds are protected from network intrusion with the help of such security measures as hot or cold wallets, two-factor authentication (2FA), and IP whitelisting. Storing your assets in NOWPayments custody comes with the minimal costs for all the transactions, while the onboarding process is instant, meaning that you are ready to accept payments right away.
How to Activate Custody on NOWPayments
You just need to follow these small steps to activate NOWPayments Custody:
1. Create a personal account on NOWPayments.
Just go to our website and click ‘Sign in’, then fill in your personal email details or your business email details. The sign-up process has never been easier.
2. Get a unique API key.
Once you’ve signed in, you need to add a new API key. To do that, go to the ‘Settings->Payments’ section and choose API Keys. It will take only a couple of seconds.
3. Activate Custody.
Go to the ‘Custody’ section on your dashboard and turn on this feature for your account.
4. Whitelist Your Addresses
To whitelist your trusted addresses, go to the whitelist section on your dashboard and choose ‘Whitelist addresses’. You can add addresses manually or by uploading a CSV file. However, make sure to add the desired wallets to the whitelist before initiating payouts.
5. Whitelist your IP addresses
To whitelist your IP addresses, go to the whitelist section on your dashboard and choose ‘Whitelist IPs’. Click ‘Add an IP address to Whitelist’ and fill in the IP address. Once you complete this process, you will have the ability to request withdrawals.
6. Start Accepting Payments
You are finally ready to accept deposits to your custody balance and track your personal funds.
Conclusion
When considering what kind of wallet is better for your business, you need to take into account such aspects as convenience, control, and cost. A custodial wallet may become the best choice if you are looking for a solution that offers security measures and an opportunity to save on transaction fees. Meanwhile, a non-custodial wallet may serve as a better alternative in the case when it is important to take full control over the funds and be independent from the custody or payment provider.
If your business is looking for a service to obtain the highest value, you’d better consider NOWPayments Custody as a streamlined solution with strong security measures, low fees, and absolute ownership over your funds. Moreover, with 0% network fees on USDT TRC20 deposits for the first 60 days for new partners, NOWPayments helps you to save on transactions in a better way.
Are you ready to make your crypto operations easier? Then activate NOWPayments Custody today and optimize your financial strategy.
FAQ
What is a private key?
A private key is a special code that is created and used to decrypt and secure data for cryptocurrency transactions.
What is crypto custody?
Crypto custody is the secure storage and management of private cryptographic keys that grant access to digital assets on a blockchain, preventing theft or loss.
What security measures are in place to protect my funds?
Whitelisting protects your assets from unauthorized operations. In addition to whitelisting, NOWPayments offers 2FA verification, which stands for two-factor authentication and is required to confirm withdrawals.
What are the fees for using NOWPayments Custody?
For each payment via NOWPayments, there’s a small 0.5% default service fee. If you’d like to accept a wide range of cryptos and settle them down in a particular coin, you can look into the autoconversion feature. In this case, an additional 0.5% service fee would come into place, which equals a 1% fee in total.
How can I start using NOWPayments Custody
To start using NOWPayments Custody, just create an account, enable the Custody feature in your Dashboard settings, and whitelist your trusted addresses and IP addresses for security. As soon as you are done with these steps, you are ready to start receiving and managing crypto payments.