The payment service provider company, Square, create a non-custodial wallet service for Bitcoin storage. This was announced on his Twitter account Jesse Dorogusker, head of hardware of the American firm.
It should be noted that this initiative of the company, was advanced last June by its CEO, Jack Dorsey. During a conference in the city of Miami, the CEO of Twitter also stated that the plans of the company, are to ensure the ownership of bitcoins. He also stressed that they do not intend to compete with other firms that provide this service.
Beyond that, he explained, it is about moving to the highest level of reaching 100 million more people. In addition, he assured that the creation of the portfolio, would be “outdoors”. That is, it would involve the community, from the design of the software to the hardware. Now, the announcement is made official by the company.
According to Dorogusker, Square will create a wallet, intended to make Bitcoin custody more conventional. He also explained that the first step for this achieved, will be to form a team dedicated to the creation of the non-custodial service.
It should be noted that digital wallets, or wallets, are divided between those with custody (custodians) and without custody (non custodial). In the former, the user has the keys and is the real owner of their coins. In the second, the company, usually an exchange, is the one that owns and controls the money of those who deposit in it.
These two types of portfolios have their advantages and disadvantages. For example, with a wallet without custody, like the one Square will create, it is more complex to exchange or sell cryptocurrencies. However, the security is optimal and complete. The only latent danger is that the user loses or forgets the private keys. The latter results in the ultimate loss of funds.
In an exchange with custody portfolios, it is easier to access the market, trade, lend money, among others. There is no danger of losing funds if the user’s passwords are forgotten. However, the disadvantages can be worrisome. So, if a wallet company is hacked, people’s funds can be stolen. The same applies if the firm closes and its owners flee.
If you don’t have your keys, those aren’t your coins.
In this case, Square you will create a non-custodial wallet service, opting for a wallet that puts privacy in the foreground. In this sense, the phrase “You don’t have keys, you don’t own your coins.» (not your keys, not your coins). It is a mantra used by the most loyal defenders of privacy in the use of cryptocurrencies.
As an example of guarded portfolios, you can think of any of the existing exchanges, from Binance to the less known ones. Another example is the PayPal or Skrill service. These companies offer the ability to buy and store Bitcoin and other digital currencies. Despite this, the user does not own the private keys and is therefore subject to dangers.
Among those risks that a person can run by not owning the keys to their BTC, is that their funds are frozen. For example, if a person receives a payment in Bitcoin for a service and these come from some suspicious activity, the authorities can force the platform to confiscate the funds.
This is an issue that Square seems to pay attention to when creating its wallet service. Currently, there is an unclear regulatory framework, so many users who place the bulk of their funds in guarded portfolios should be concerned.
Another example that could be used, is that at a certain point the authorities create an environmental legislation on mining. In such a case, bitcoins from coal-fired energy sources could be seized. With the Bitcoin Blockchain being transparent, it is likely that the authorities will be able to track them.