MEDIA Protocol And The Future Of Blockchain — Part 6
The team here at MEDIA Protocol are deeply committed to creating a more direct, transparent and secure ecosystem for content creators, publishers, and consumers through the revolutionary application of blockchain technology. In fact, it’s the very revolutionary nature of the technology that really excites us.
We’d like to share our thoughts about blockchain technology and how we see it progressing into the future, hopefully demystifying and clarifying some of the misconceptions that currently exist about blockchain and its applications. We want to help create a common understanding of the technology for everyone’s benefit.
This series of articles aims to explore developments within blockchain technology, the relationship between institutional investors and blockchain, and the move towards regulation within the space. We want to help everyone — the marketeers, the technologists, and the content consumers — understand the potential for this game-changing technology.
Strap in, and welcome to the MEDIA Protocol Future Of Blockchain Series.
Part 6 — Custody
Self-custody of cryptocurrency is fundamental to its current use. A crypto asset can be stored by its owner in their own wallet without the need of a centralised institution, like a bank or any other financial institution. However, this approach is very risky and has been proven to be easily attacked by hackers. In fact, self-custody is one of the biggest barriers to entry for plenty of qualified investors who have shown interest in the crypto world.
This is where crypto custodies come in to make a difference. Cryptocurrency custody systems are the latest introduction to the crypto ecosystem. This latest innovation is sure to have a significant impact on the market’s future.
In its simplest terms, custody systems are third-party providers of storage and security services for cryptocurrencies. These relieve the users from the responsibility of keeping their keys safe, allowing them to rest assured that nobody will have access to their wallets.
The Urgent Need For Custody
Traditionally in the crypto world, traders have had to store their unique trading key in either hot (online) or cold (offline) storage.
Hot storage allows a user to store their key on the internet, usually in the cloud, which gives the user ease of usage and accessibility to trading. However, having a key stored online also means that it’s prone to exposure and attacks.
On the other hand, cold storage refers to the offline storage of information, and while this method is not prone to hacker attacks, it can certainly be exposed to an innumerable number of dangers. For example, if the user chooses to store their key on a physical piece of paper and then it gets lost, or any other instance of human error getting on the way.
But why are crypto custodies so crucial to the crypto world today?
Custody gives users a degree of peace of mind, knowing that their private key — which is a combination of 64 unique alphanumeric characters that allow the user to conduct a transaction — is stored in a safe virtual place where it is not prone to attacks by hackers.
Online wallets and crypto exchanges have also considered a potential solution at different points in time. However these have demonstrated not to be as secure as was once hoped, and the possibility for attacks remains open with these solutions. In reality, the crypto world truly needs to address the investor’s concerns about security and safety before continuing to attract big crypto purchases.
In addition to security, custodies will also be a big step towards regulating crypto. According to the Securities & Exchange Commission, institutional investors that have customer assets worth more $150,000 are required to store and save these with a “qualified custodian”.
With crypto, we have not yet found that this rule is entirely taken into consideration — yet.
Custodies Will Help Crypto Go Mainstream
Regulating crypto is a crucial element to the mainstream acceptance of this technology. It is the only factor that will allow users to feel like their assets are safe and secure — allowing deep-pocketed investors to finally feel safe enough to begin investing serious money in crypto. Additionally, the use of custodies will also help make cryptocurrencies less volatile, which will contribute with the investor’s confidence when investing.
It is therefore no surprise that, according to reports, in May this year, at least three giant Wall Street custodians — Bank of New York Mellon Corp., JPMorgan Chase & Co. and Northern Trust Corp. — began actively working on developing crypto-custody services.
Is The Future Of Custody Already Here?
Coinbase Custody is one of the newest and most promising custodies introduced to the crypto world. It is a combination of Coinbase’s battle-tested cold storage for crypto assets, an institutional-grade broker-dealer and its reporting services, and a comprehensive client coverage program. Additionally, Coinbase Custody will comply with and implement several SEC rules and regulations, genuinely allowing users to feel confident and secure about their assets stored online. Perhaps the future isn’t as far away as we think.
Still, there’s little doubt that the future of blockchain lies with regulation. What will regulations mean for the cryptocurrency ecosystem? And how secure are they actually going to be? Learn more about this in Part 7 of our series.
Read All Parts In Our Future Of Blockchain Series
Part 1 — What Is Blockchain?
Part 2 — What Does The Future Hold For Blockchain Technology?
Part 3 — Why Aren’t Tokens Mainstream?
Part 4 — Investing In The Future
Part 5 — Trading Platforms
Part 6 — Custody (This article above)
Part 7 — The Security Of Regulation (Coming Soon)
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