This article covers self-custodial wallets, the risks and benefits associated with them, and the responsibility that comes with owning such a wallet.
What is a self-custodial wallet?
Valora is a self-custodial wallet, meaning users have full control over and access to their wallet through a Recovery Phrase and PIN. Valora Inc. does not store or maintain this information and cannot restore access if a Recovery Phrase or PIN is lost. It is essential that users store their Recovery Phrase separately from their device and the Valora app.
To illustrate, imagine purchasing a physical wallet from a store. Once purchased, the owner is entirely responsible for protecting the wallet and its contents. Similarly, when an address is created on Valora, the user is responsible for safeguarding the Recovery Phrase and PIN.
Benefits of a self-custodial wallet
While managing a self-custodial wallet may seem challenging for new cryptocurrency users, it offers several advantages compared to centralized exchanges or traditional banks:
- Users do not need to rely on third parties, such as exchanges, for access.
- There are no costs associated with creating or maintaining a self-custodial wallet.
- Transactions can be completed globally within seconds, with users able to access their funds from anywhere in the world.
- Only the user is given control over access to the funds.
- Users maintain control over their privacy.
What happens when an address is created in Valora?
Unlike custodial solutions (similar to a traditional bank account or centralized cryptocurrency exchange), creating an address using Valora does not involve creating an account with Valora Inc., cLabs, or any other entity. Instead, Valora provides a user interface to access and interact with the address on supported blockchains.
Due to the nature of blockchain technology, addresses cannot be destroyed once created. If users wish to stop using Valora, they can contact support for instructions on disassociating from the Valora wallet. If users want to stop using Valora but still access their address, they can do so by restoring the address on another wallet using the Recovery Phrase.
Other important considerations
- Irreversible transactions: All Valora transactions occur on the blockchain, meaning they are irreversible. Users should exercise caution before completing transactions. For safe transaction tips, refer to our Best Practices guide.
- Private keys vs. Recovery Phrase: While related, the terms “private key” and “Recovery Phrase” refer to different things. The private key (a combination of numbers and letters) gives sole control over tokens, while the Recovery Phrase is a set of words (also known as a seed phrase or mnemonic) from which the private key is derived. Controlling the Recovery Phrase means controlling the private key and access to the Valora wallet address.
- Taxes: Users should be mindful of any tax implications, which vary by country.
For further assistance, contact Valora support at support@valoraapp.com or join Valora's Discord server.