What are Private Keys in Crypto?
All transactions are validated without the need for any intermediaries in a decentralized way in the crypto ecosystem. Transactions occur through self-executive smart contracts, which makes every agent responsible for their transactions.
Every agent in the crypto ecosystem has a wallet to store their funds and do transactions on DeFi. A crypto wallet has two keys; a public key(also referred to as a wallet address) which you can publicly share to receive funds, and a private key to establish the custody of the wallet. Both keys are usually strings that consist of letters and numbers.
(An ERC-20 public address)
8da4ef21b864d2cc526dbdb2a120bd2874c36c9d0a1fb7f8c63d7f7a8b41de8f (A private key)
Why are Private Keys Important?
You can think of private keys as a password for a crypto wallet as they let you access the funds in your crypto wallet. If a third party accesses your private keys, they can also access your funds and send them to another address. Also, if the private keys are lost, you cannot access your wallet. In addition to these, there is no way to revoke the transaction as it executes through smart contracts. Thus, storing private keys is crucial in terms of security for users.
The advantage of public and private keys structure is anonymity. You do not need to provide any information if you are solely transacting through the DeFi ecosystem. Moreover, if you store your private keys safely, encountering fraud activities has a much lower chance when compared to the traditional financial system.
Custodial vs Non-Custodial Wallets
When it comes to storing private keys, there are two different wallet types; custodial and non-custodial;
- In a non-custodial wallet, only you have control of your private keys. No one but you accesses it and thus, it is your responsibility to store them safely.
- A third party controls your private keys in a custodial wallet. For example, a crypto exchange, a CeFi company, takes custody of your wallet and protects your funds.
- Both wallet types have pros and cons; with a non-custodial wallet if you fail to store your private keys safely you may lose all your funds. Meanwhile, you won’t have to worry about storing them while using a custodial wallet, so you will have less responsibility. Losing your password is less devastating than losing your private keys.
- Another thing to keep in mind is limitations. CeFi services may suspend withdrawals for some time or limit your transactions. On the other hand, non-custodial wallets have no limitations as they operate on the DeFi ecosystem.
How does Metavest Protect Users’ Funds?
The world financial system is going through an adaption from traditional finance to decentralized finance. As Metavest, we believe taking custody of their wallets and making transactions on through DeFi can be confusing for non-tech-savvy users. That is why we take custody of our users’ wallets, simply all the processes for accessing DeFi and offer opportunities for the future of finance.
To protect our user’s funds, we have partnered with Fireblocks, which uses the best practices when it comes to the custody of digital assets. Fireblocks is a leading custody management company in the crypto sector and thousand of web3 projects manages their digital operations through them.
While we strive to develop Metavest App in the most secure and user-friendly way, make sure to follow us through social media to keep up with the latest developments!
Metavest is a global crypto bank application that provides its users with the opportunities of Decentralized Finance (DeFi) in a simple and convenient UX. The company has been founded by a team that is highly experienced in blockchain technology and finance back in November 2021. Having exceeded a team of more than 20 passionate people, Metavest is aiming to boost the usage of blockchain and DeFi in developing countries.
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