Loopring

Hybrid

when

Security

<h4><b>The recent Loopring Smart Wallet hack brought about the topic. </b></h4> 
<p>Let’s explore what it is all about and how Custody and Self-custody differ.</p> 
<h5><strong>Exploring Wallet Security Levels</strong></h5> 
<p><span style="font-weight: 400;">Hackers exploited </span><a href="https://x.com/loopringorg/status/1799791898296451515?s=46" target="_blank" rel="noopener"><span style="font-weight: 400;">Loopring’s smart wallet</span></a><span style="font-weight: 400;"> through the </span><span style="font-weight: 400;">two-factor authentication </span><span style="font-weight: 400;">(2FA) system. They got into Loopring through the 2FA by either phishing links, an insider job, or direct hacking. </span><span style="font-weight: 400;">Let’s examine what custody and self-custody are all about.</span></p> 
<h5><b>What is Custody?&nbsp;</b></h5> 
<p><span style="font-weight: 400;">Custody in <a href="https://www.altcoinbuzz.io/?s=wallets" target="_blank" rel="noopener">crypto wallets</a> is more than the wallet provider seeing your private keys. Let’s use a clear example: PayPal and Venom, for instance, do not see your credit card numbers. At the same time, Coinbase can’t access your wallet’s private keys. Your private keys are in secure environments known as </span><a href="https://www.entrust.com/resources/learn/what-are-hardware-security-modules" target="_blank" rel="noopener"><span style="font-weight: 400;">Hardware Security Modules (HSM)</span></a><span style="font-weight: 400;">. </span></p> 
<p><span style="font-weight: 400;">Storing your private keys in HSMs keeps them away from other eyes. Customers do not see them. So, c</span><span style="font-weight: 400;">ustody is all about control, not only security. It works on two concepts: Positive control and Negative control.</span></p> 
<ul> 
 <li><strong><i>Positive Control: </i></strong>Here, the wallet provider can perform user transactions without user interference. If the owners of your wallet company move your assets when they update their software, that’s a positive control.</li> 
 <li><strong><i>Negative Control: </i></strong>In this case, the wallet providers can stop you from accessing your funds. A clear example is a business shutting down without allowing you to access your assets. That’s negative control.</li> 
</ul> 
<p><img decoding="async" class="wp-image-142828 aligncenter" src="https://www.altcoinbuzz.io/wp-content/uploads/2024/06/cvggrsr-229x300.png" alt="" width="461" height="604" srcset="https://www.altcoinbuzz.io/wp-content/uploads/2024/06/cvggrsr-229x300.png 229w, https://www.altcoinbuzz.io/wp-content/uploads/2024/06/cvggrsr-320x420.png 320w, https://www.altcoinbuzz.io/wp-content/uploads/2024/06/cvggrsr.png 397w" sizes="(max-width: 461px) 100vw, 461px"></p> 
<p>&nbsp;</p> 
<h6 style="text-align: center;"><strong>Source: </strong><a href="https://x.com/nassyweazy/status/1799989768089915481" target="_blank" rel="noopener"><strong>X</strong></a></h6> 
<h5><b>What is Self-Custody?</b></h5> 
<p><span style="font-weight: 400;">In the case of self-custody, you can control your assets without interference from your wallet provider. You control and manage your keys. Also, you can store it offline by writing it on a notepad. </span></p> 
<p><span style="font-weight: 400;">You can also retrieve your keys without using centralized recovery methods. The risk is that you’ll take responsibility if you misplace your private keys. All in all, self-custody gives you control over your assets. Here is an example of how self-custody can end.</span></p> 
<p><img decoding="async" class="wp-image-142829 aligncenter" src="https://www.altcoinbuzz.io/wp-content/uploads/2024/06/vcxfdfgdhfyhy-254x300.jpg" alt="" width="493" height="582" srcset="https://www.altcoinbuzz.io/wp-content/uploads/2024/06/vcxfdfgdhfyhy-254x300.jpg 254w, https://www.altcoinbuzz.io/wp-content/uploads/2024/06/vcxfdfgdhfyhy-356x420.jpg 356w, https://www.altcoinbuzz.io/wp-content/uploads/2024/06/vcxfdfgdhfyhy.jpg 397w" sizes="(max-width: 493px) 100vw, 493px"></p> 
<h6 style="text-align: center;"><strong>Source: <a href="https://x.com/cryptoskullx/status/1749200010770592015" target="_blank" rel="noopener">X</a></strong></h6> 
<h5><b>What is Hybrid-Custody?&nbsp;</b></h5> 
<p><span style="font-weight: 400;">Hybrid custody falls between Custody and Self-custody. Here, the </span><a href="https://docs.oracle.com/cd/E13222_01/wls/docs81/dvspisec/atn.html" target="_blank" rel="noopener"><span style="font-weight: 400;">backend authentication management provider</span></a><span style="font-weight: 400;"> and your wallet provider control your keys. </span></p> 
<p><span style="font-weight: 400;">Your keys are on your device, but your provider manages some authentications. Hybrid Custody balances control and convenience, so there is some security and control.</span></p> 
<p><img decoding="async" class="wp-image-142830 aligncenter" src="https://www.altcoinbuzz.io/wp-content/uploads/2024/06/cvxfdggdfgt-217x300.jpg" alt="" width="423" height="585" srcset="https://www.altcoinbuzz.io/wp-content/uploads/2024/06/cvxfdggdfgt-217x300.jpg 217w, https://www.altcoinbuzz.io/wp-content/uploads/2024/06/cvxfdggdfgt-303x420.jpg 303w, https://www.altcoinbuzz.io/wp-content/uploads/2024/06/cvxfdggdfgt.jpg 384w" sizes="(max-width: 423px) 100vw, 423px"></p> 
<h6 style="text-align: center;"><strong>Source: <a href="https://x.com/cordyjos/status/1620303630749552640" target="_blank" rel="noopener">X</a></strong></h6> 
<h5><strong>Custody as a Spectrum</strong></h5> 
<p><span style="font-weight: 400;">Imagine a seed phrase written on a piece of paper (self-custody) and a service that stores users’ seed phrases on their server (Custody). All these are at different ends.</span></p> 
<p><span style="font-weight: 400;">The legal implications of custody vary by law and the services offered, and they change over time. Positive control is the most accepted definition. Regulations in the U.S. and E.U. are increasing safeguarding rules.&nbsp;</span></p> 
<h5><b>Conclusion</b></h5> 
<p><span style="font-weight: 400;">Custody and self-custody are not a matter of good or bad. Transparency is the most crucial thing in crypto when deciding what to use. If the wallet provider is open about their operations, that’s a valid point to check further.</span></p> 
<p><a href="https://www.patreon.com/altcoinbuzz" target="_blank" rel="noopener"><img decoding="async" class="alignnone size-full wp-image-123700" src="https://www.altcoinbuzz.io/wp-content/uploads/2023/09/Alpha_website_leaderboard-banner.jpg" sizes="(max-width: 1197px) 100vw, 1197px" srcset="https://www.altcoinbuzz.io/wp-content/uploads/2023/09/Alpha_website_leaderboard-banner.jpg 1197w, https://www.altcoinbuzz.io/wp-content/uploads/2023/09/Alpha_website_leaderboard-banner-300x37.jpg 300w, https://www.altcoinbuzz.io/wp-content/uploads/2023/09/Alpha_website_leaderboard-banner-1024x127.jpg 1024w, https://www.altcoinbuzz.io/wp-content/uploads/2023/09/Alpha_website_leaderboard-banner-768x95.jpg 768w, https://www.altcoinbuzz.io/wp-content/uploads/2023/09/Alpha_website_leaderboard-banner-696x86.jpg 696w, https://www.altcoinbuzz.io/wp-content/uploads/2023/09/Alpha_website_leaderboard-banner-1068x132.jpg 1068w" alt="" width="1197" height="148"></a></p> 
<div class="youtube-embed" data-video_id="GAixaXAwbzU">
 <iframe title="If THIS Happens Cardano ADA is Going to Moon in ....." width="696" height="392" src="https://www.youtube.com/embed/GAixaXAwbzU?feature=oembed&amp;enablejsapi=1" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>
</div> 
<h6><strong>Disclaimer</strong></h6> 
<p>The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted levels of risk tolerance of the writer/reviewers and their risk tolerance may be different than yours. We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments so please do your due diligence. Copyright Altcoin Buzz Pte Ltd.</p> 
<p>The post <a href="https://www.altcoinbuzz.io/bitcoin-and-crypto-guide/the-difference-between-custody-and-self-custody/">The Difference Between Custody and Self-Custody</a> appeared first on <a href="https://www.altcoinbuzz.io">Altcoin Buzz</a>.</p>

The Difference Between Custody and Self-Custody

Altcoin Buzz

Other articles published on Jun 12, 2024

Elizabeth Warren Orders Powell To Cut Rates?🚀Crypto Market Update

Could MoonBag Coin Reach $1 After Burns: Coinbase Listing Rumour Has Made Investors Forget Chainl...

How to generate passive crypto income with masternodes

Investors Predict Stellar Price Surge

BREAKING: Terraform Labs Settled with SEC in Terra-SEC Case! Here are the Details

Binance Coin (BNB) Price Prediction for June 12

Join our free newsletter for daily crypto updates!