Developments in Cryptocurrency Custody
In the face of plummeting prices, cryptocurrency is still seeking ways to thrive and create a sustainable economy and ecosystem that gives cryptocurrency more footing in the financial world. We are seeing a lot of emerging technologies, platforms, and products that are designed for this purpose and are slowly making cryptocurrency more available to the masses. One such example of these emerging developments can be found in cryptocurrency custody solutions. These solutions seek to fight against the security issues that cryptocurrencies face today. If you are interested in learning more about these solutions, let’s dive into how these solutions function and what they may do in the future.
What Are Cryptocurrency Custody Solutions?
In short, cryptocurrency custody solutions are services provided by third parties that help major institutions such as exchanges and other entities that hold large amounts of cryptocurrencies keep their assets safely stored away. These types of solutions are mostly aimed at investors who use hedge funds and other such large holders of crypto as security is the number one priority on their minds.
The reason why cryptocurrency custody solutions have been developed is due to the inherent security issues that come with existing crypto storage methods. Hot storage, or methods that are connected to the internet, is always at risk of being hacked and drained of all funds. Cold storage, while more secure because it is offline, is always at risk of loss if you should lose the private keys to your account or lose/damage the physical device or paper that your information is held on.
Cryptocurrency custody solutions provide a mixture of both methods so that investors are safeguarded from total loss of assets. With hot storage methods, investors or investment handlers will always be able to move around funds at a moment’s notice and with cold storage methods, providers can make sure that funds are always secured and ready to go if they need to be transferred over to a hot storage method.
Where Will We Cryptocurrency Custody Solutions Go?
As of the time of writing, there are two important developments expected to come out of the cryptocurrency custody solutions market. The first development is the entry of much larger, well-established financial institutions offering their own crypto custody solution services. This would give more credibility to the cryptocurrency industry, would open it up to even more investors, and would begin to start involving normal financial institutions in the crypto economy. In addition, these crypto custody solutions would help to solidify more solid regulatory security guidelines so that we can move forward with what we should expect from laws regarding cryptocurrency offerings.
Cryptocurrency custody solutions are simply a way to say that someone else is using smart storage practices to protect your investments. However simple it may be, it can actually achieve quite a bit in the cryptocurrency industry. To better familiarize yourself with the offering, reference this guide above before seeking out cryptocurrency custody solutions.