Investor’s Best Bitcoin Wallet Options
New crypto investors are not savvy to the best Bitcoin wallet options and expect to have crypto assets stored and safeguarded the same way traditional assets are. Since its creation, Bitcoin investors have understood the need to take 100% responsibility for the safe storage of their private keys. Private keys are used to make transactions or access Bitcoin and, if stolen, the assets are lost forever.
Online and cryptocurrency exchange wallets are not good options for storing Bitcoin as the private keys are not held by the owner, but rather by the wallet platform or the exchange. Experienced bitcoiners recognize that the safest option is a hardware cold wallet that remains solely in their possession.
Those new to investing in Bitcoin typically do not want to incur responsibility for its safe storage. They would rather their crypto assets be secured in the same manner as traditional assets. Cryptocurrency custodians provide this service primarily for institutional investors with customer assets worth more than $150,000 per SEC regulations.
On July 22, 2020, banks were given the nod to start providing custodial services for customers by the Office of the Comptroller of the Currency (OCC). Just as banks offer safe-deposit boxes for storing valuables, they can now offer virtual vaults for safe storage of cryptocurrency assets.
Are Custodial Wallets a Good Idea?
Bitcoin does not need custodians, as you can hodl an unlimited amount on a small, compact hardware cold wallet such as Trezor or Ledger Nano. Of course, regulated industry players like Coinbase or Gemini agree that digital asset custodian services can be good for the industry.
A regulated solution could be viewed by newcomers as the best bitcoin wallet option to ensure the safety and security of their assets. The safe storage of digital assets is highly technical and can be a difficult process for less techno-savvy investors. Bitcoin is a bearer instrument, so if you have the private key, you have control of the asset. Equally as important, if the keys are lost or stolen there is no recourse.
Digital assets bring us back to a bearer system, and the transfer of assets is possible without the services of a third party. Reconciliation happens automatically on the blockchain. Just as a bank holds your dollars, it could now hold and secure your Bitcoin, making it easier to buy. But it also makes it easier for your BTC to be confiscated, something that is impossible if self-stored.
While custodial services may be more convenient, they are not necessarily the best bitcoin wallet option.
Now that regulators are stepping in to set rules for the playing field, big banks will start considering custodial services. Banks make money from lending the money deposited by customers. So it makes sense to look for banks to soon have the ability to loan Bitcoin and pay interest to those entrusting them to store it. This would make custodial services worthwhile for banks. In any case, Bitcoin saw an increase of 5% upon release of the unexpected decision from the OCC to allow banks to hold cryptocurrencies.
Cashless Impact on Crypto Wallets
It is easy to understand how crypto outperforms traditional monetary systems by providing a borderless, digital, fast-moving alternative fueling a move toward a cashless society. More than half of all money transactions are currently processed electronically and banks, as well as countries, are leading the way to totally digital operations.
The OCC has now given authority to banks and other service providers to leverage new technology and meet their customer’s needs in innovative ways. The coronavirus is pushing the banking industry to undergo a reengineering revolution to get rid of cash-based transactions. New investors are starting to look at Bitcoin with growing interest.
As the movement towards a cashless society gains momentum, the need to understand the best bitcoin wallet options will become more important. The ultimate cashless payment method should be democratic, inflation-resistant, frictionless, permissionless, and censorship-resistant. Currently, Bitcoin possesses these attributes, and storage in a custodial wallet defeats the purpose.
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