Telegram Wallet, a major Telegram bot allowing users to buy and sell cryptocurrencies like Bitcoin (BTC), has chosen custody over self-custody to chase easier onboarding goals, according to a senior executive.
In July 2023, crypto-friendly Telegram messenger officially announced the integration of the custodial crypto wallet, Telegram Wallet, to allow users to access the wallet directly from the messenger’s settings.
Though Telegram has enabled existing Wallet users to see the wallet bot directly in the messenger, those who have never used the bot are still not seeing the crypto wallet in their settings section of the messenger.
According to Telegram Wallet chief operating officer Halil Mirakhmed, the full Wallet rollout is expected to begin sometime in November 2023, starting with “several African and Latin American countries.” With the rollout, Telegram users in select countries can access the Wallet and start buying, selling and transacting cryptocurrencies like Bitcoin (BTC).
“The rollout will continue throughout MENA, South East Asia, Central Asia, and Eastern Europe,” Mirakhmed told Cointelegraph, adding:
“Once the global rollout has concluded, Wallet will become available in the Telegram settings menu throughout the world, with the exception of the jurisdictions in which Wallet does not operate.”
As Telegram Wallet anticipates the soon-to-come rollout of its crypto wallet to millions of Telegram users, it’s important to note that the wallet bot is not self-custodial.
Unlike major self-custodial wallets, like MetaMask, the Telegram Wallet bot operates a custodial wallet currently, meaning that users entrust their coins to a third party and do not own their assets directly. For example, to withdraw Bitcoin from the Telegram Wallet, users must have enough BTC to cover Telegram Wallet’s fees, which may sometimes be more expensive than the native fees on the Bitcoin network.
According to Telegram Wallet’s chief operating officer, the wallet bot platform opted for a custodial solution instead of a self-custodial one for several reasons, including easy onboarding of new users.
“If you want to introduce as many people as possible to crypto, self-custody becomes exceedingly difficult,” Mirakhmed said in an interview with Cointelegraph.
“Imagine if you’ve never used crypto before and your go-to solution for now, let’s say, is a non-custodial wallet on Ether,” the chief operating officer said. The exec stressed that before using a self-custodial wallet, one has to sort out how to store the seed phrase and figure out how to deal with the wallet, whether it’s a Chrome extension or an app.
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One should also be ready to pay gas fees to transact Ether (ETH), which adds too much complexity to a non-crypto native user, Telegram Wallet COO believes.
In contrast to self-custodial wallets, Telegram Wallet aims to help users start using crypto the exact moment they click on Wallet on their Telegram settings, Mirakhmed said:
“First of all, the onboarding is very simple. Secondly, you already have a few chains on there. And thirdly, when you want to send someone any assets, you just use a telephone contact. So I can send money to you on Telegram rather than having to know what your address is. It all happens within Telegram.”
Cointelegraph previously reported on the issue of understanding cryptocurrency custody and choosing between custodial wallet solutions and self-custodial ones. Long story short, custodial wallets are more convenient but significantly less safe, while self-custodial, or non-custodial wallets, are less convenient but more secure. The biggest issue of using a self-custodial solution is the user’s sole responsibility to keep the private key, or the seed phrase, safe, in order to keep owning a crypto asset.
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Author: Helen Partz