Telegram Wallet, a major Telegram bot that allows users to buy and sell cryptocurrencies such as Bitcoin (BTC), is opting for custody rather than self-custody in pursuit of easier onboarding goals, a senior executive said.
In July 2023, the crypto-friendly Telegram Messenger officially announced the integration of the hosted crypto wallet Telegram Wallet, allowing users to access the wallet directly from Messenger settings.
Although Telegram has allowed existing wallet users to see the wallet bot directly in Messenger, people who have never used the bot still cannot see the crypto wallet in the settings section of Messenger.
Telegram Wallet chief operating officer Halil Mirakhmed said the wallet’s full rollout is expected to begin sometime in November 2023, starting with “several African and Latin American countries.” With the launch, Telegram users in select countries can access the wallet and start buying, selling, and trading cryptocurrencies such as Bitcoin (BTC).
“The program will continue to roll out across the MENA region, Southeast Asia, Central Asia, and Eastern Europe,” Mirakhmed told Cointelegraph, adding:
“After the global rollout, Wallet will be available in Telegram settings menus around the world, except in jurisdictions where Wallet does not operate.”
As Telegram Wallet is expected to roll out its crypto wallet to millions of Telegram users soon, it’s important to note that the wallet bot is not self-hosted.
Unlike major self-hosted wallets like MetaMask, the Telegram Wallet bot currently operates a custodial wallet, meaning users entrust their tokens to a third party and do not own their assets directly. For example, to withdraw Bitcoin from a Telegram wallet, a user must have enough BTC to cover Telegram wallet fees, which can sometimes be more expensive than native fees on the Bitcoin network.
Telegram Wallet’s chief operating officer said the wallet bot platform chose a hosted solution over a self-hosted solution for several reasons, including making it easier for new users to join.
“If you want to expose cryptocurrencies to as many people as possible, self-custody becomes extremely difficult,” Milahmed told Cointelegraph.
“Imagine if you have never used cryptocurrency before and your go-to solution now is a non-custodial wallet on Ethereum,” the COO said. The executive emphasized that before using a self-hosted wallet, it is necessary to figure out how to store the mnemonic phrase and figure out how to handle the wallet, whether it is a Chrome extension or an app.
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Telegram Wallet Chief Operating Officer believes that people should also be prepared to pay gas fees for Ethereum (ETH) transactions, which adds too much complexity for non-crypto-native users.
Mirakhmed said that compared to self-hosted wallets, Telegram wallets are designed to help users start using cryptocurrencies immediately when they click “Wallet” in Telegram settings:
“First of all, onboarding is very easy. Secondly, you already have some chains. Thirdly, when you want to send any asset to someone, you just use the phone to contact. So I can send you money through Telegram, Without having to know your address. It all happens within Telegram.”
Cointelegraph has previously reported on understanding cryptocurrency custody and choosing between managed and self-hosted wallet solutions. Long story short, custodial wallets are more convenient but significantly less secure, while self-hosted or non-custodial wallets are less convenient but more secure. The biggest issue with using a self-custody solution is that it is the user’s responsibility to keep the private key or mnemonic phrase safe in order to continue to own the crypto asset.
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