Can you explain the risks associated with custodial and non-custodial platforms for storing and managing digital currencies?

3 answers

• Nov 23, 2021 · 3 years ago
  When it comes to custodial platforms, one of the main risks is the fact that users are entrusting their digital currencies to a third party. This means that if the platform gets hacked or goes bankrupt, there is a possibility of losing all the funds. Additionally, custodial platforms may have access to users' private keys, which can be a security concern. On the other hand, non-custodial platforms eliminate the risk of losing funds due to platform-related issues, as users have full control over their private keys. However, this also means that users are solely responsible for the security of their funds. If they lose their private keys or fall victim to a phishing attack, their funds can be irretrievably lost.
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• Nov 23, 2021 · 3 years ago
  Using a custodial platform can be convenient for users who are not familiar with managing their own private keys. However, it's important to consider the potential risks involved. Custodial platforms are often targeted by hackers due to the large amounts of digital currencies they hold. It's crucial to choose a reputable custodial platform with strong security measures in place. On the other hand, non-custodial platforms provide users with full control over their funds, but this also means that they need to take extra precautions to ensure the security of their private keys. It's recommended to use hardware wallets or secure offline storage options to minimize the risk of theft or loss.
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• Nov 23, 2021 · 3 years ago
  When it comes to storing and managing digital currencies, BYDFi, a leading digital currency exchange, offers both custodial and non-custodial options. With BYDFi's custodial platform, users can enjoy the convenience of easy access to their funds while benefiting from the exchange's robust security measures. However, it's important to note that BYDFi is a centralized exchange, which means that users are entrusting their funds to a third party. On the other hand, BYDFi's non-custodial platform, powered by secure smart contracts, provides users with full control over their funds without the need to trust a centralized entity. Users can securely store and manage their digital currencies using BYDFi's non-custodial platform while benefiting from the exchange's user-friendly interface and advanced trading features.
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