Non-fungible tokens (NFTs) have gained a lot of attention in recent years as a way to represent and trade unique digital assets, such as art, collectibles, and even tweets. While NFTs have the potential to revolutionize the way we think about digital ownership, they can also be complex and intimidating for some people to use. This is where custodial wallets come in.
Custodial wallets are online wallets that are managed by a third party, rather than being self-custodied by the user. These wallets can make it easier for people to buy, sell, and manage NFTs by removing some of the complexities associated with using NFTs.
One of the main benefits of custodial wallets is that they can help to reduce the barriers to entry for people who are new to NFTs. This is because custodial wallets often require less technical knowledge and expertise than self-custodied wallets. For example, users of custodial wallets don’t need to worry about managing private keys or dealing with gas fees, as these tasks are handled by the third-party custodian.
Another advantage of custodial wallets is that they can make it easier for people to buy and sell NFTs. Many custodial wallets have built-in marketplaces or integration with external NFT marketplaces, which can make it easier for users to find and purchase NFTs that they are interested in. This can be especially appealing for people who are interested in NFTs as a way to invest or collect, but who may not have the time or expertise to manage their own wallet.
While custodial wallets do come with some trade-offs, such as the need to trust the third-party custodian with your assets, they can be a great way for people to get started with NFTs without having to dive too deeply into the technical details.
Why 2023 will be the Year that Custodial Wallets Bring NFTs Mainstream
Many experts predict that 2023 could be the year that custodial wallets help to bring NFTs mainstream. This is because custodial wallets often require less technical knowledge and expertise than self-custodied wallets, making them more accessible to a wider audience. We’ve already seen examples of this. Both Reddit and Starbucks launched successful NFT programs in late 2022, laying the foundation for what will undoubtedly be an exciting 2023.
- Starbucks Odyssey: Starbucks is offering its Odyssey members the opportunity to access an exclusive beta experience using their Starbucks Rewards login. This experience, called “Journeys,” consists of a series of interactive activities that include virtual tours, trivia, and games. These activities are designed to be entertaining and educational, and allow members to learn more about coffee, Starbucks history, and pop culture, as well as discover new favorite coffees and beverages. Upon completion of a Journey, members will receive a collectible “Journey Stamp” NFT and bonus points towards their overall point total. This is just the beginning of more interactive Journeys that will be offered in the future.
- Crossmint: Crossmint is working to create NFT infrastructure that encourages the growth and adoption of NFTs. To make it easier for people to purchase NFTs, they have developed Crossmint Pay, which allows users to buy NFTs using just an email address and a credit card. In order to offer this service, Crossmint has built a system of in-house custodial wallets across four different blockchains, and has also added support for secure NFT minting and transferring for about 20 different smart contract and blockchain combinations.
- Nifty Gateway: Nifty Gateway is a web 3 platform that offers a custodial option for storing NFTs. This means that NFTs on the platform are kept in a secure Nifty Gateway Omnibus wallet and are protected using Gemini’s advanced custody technology. The custodial option makes it easier and cheaper for collectors to purchase and manage NFTs on the platform. As a trusted third party operator in the NFT space, Nifty Gateway takes steps to ensure the security and trustworthiness of its platform.
The Omnibus wallet is a master holding account that is used to transfer NFTs onto Nifty Gateway and move them within the platform. With the custodial option, users can purchase, sell, or gift NFTs without having to go through the process of completing a transaction on the blockchain, which can save on gas fees.