Blockchain technology (Nakamoto, 2009) allows end-users to self-custody – possess by themselves their crypto assets’ public and private cryptographic keys and eliminate intermediaries.
Traditionally, banks and other conventional financial institutions act as custodians for the end-users, storing assets, keeping transaction recordings, providing settlement services, and finalising transactions. In contrast, blockchain technology allows end-users to self-custody, possess their crypto assets’ public and private cryptographic keys in so-called crypto wallets, and eliminate intermediaries. This quality allows people to act as their own bank and protects them from the whims of centralised financial institutions, which might set limitations, freeze accounts, or become insolvent.
Distinctive features of self-custody crypto wallets are:
• They operate in blockchain ecosystems with properties such as distributed consensus, immutability, and irreversibility.
• They are a means of payment in different cryptocurrencies, a modern phenomenon that arose more than ten years ago with the introduction of Bitcoin as the first implementation of blockchain technology.
• Transactions could be made in a few seconds or minutes independently of location peer-to-peer if there is an internet connection.
• They allow users to natively own their funds (self-custody) in cryptocurrencies, thereby eliminating third parties such as banks, exchanges, and funds.
• Non-use of such third parties, in turn, allows users to skip KYC processes, which are time and cost-demanding.