Digital Asset Custodian — Why are we still doing this?
As of today Sept 11, 2018, the ICO market has very much ground to a spluttering halt. The whole charade of the greatest fool has become apparent and crypto investors are hardly releasing their purse strings to back ICO projects buying only tokens with no underlying (Here’s a quick lowdown on industry happenings — https://bit.ly/2NAdmno). Ethereum prices have very much collapsed as fast as it has risen through the whole of 2017. Post ICO projects are starting to hedge out into none other than fiat positions to preserve whatever capital that they have raised in the giddy heights of the ICO euphoria.
The founder of Ethereum, Vitalik Buterin has come out to publicly state that prices of ETH have hit its ceiling and no longer of will we see 1000x returns again. Ever. (https://bloom.bg/2x1gJcR)
So why are we still doing what we are doing? Why do we custodize digital assets that might not have any more value moving into the future? Why build solutions for an industry that might just become as cold as it was only two years back?
Before we can get to the derivative why, the core why under girding would be the very fundamental belief that blockchain as a technology is here to stay and to evolve. Taking a step back, if we strip away all the furor and massive gains that people have made with cryptocurrencies(Cryptocurrencies have its usefulness in the blockchain eco-system. Just not with the crazy valuations we’re seeing and would be subject for another discussion), in it’s purest form it was meant for a true peer to peer system without intermediaries or governmental control. The consensus of the majority would be the defining rule for decisions.
However, that ideal end state where the people had true democracy would continue to be a pipe dream as long as humans are in control of the technology. As decentralized as folks would like to claim that blockchain is, it is highly centralized in the hands of a few syndicated groups. Power is consolidated either in the ones with the hashing power, political power or the early token holders. Externally, even governments are sitting up and taking matters into their own hands with experimentation of blockchain (Singapore: Project Ubin. China: SOE utilizing blockchain technology) and regulatory control.
The blockchain industry is one massive social experiment that is still continuing to change. And it has drawn the attention of the financial world and made a dent in asset classes. It would not return to the yesteryears of quiet oblivion. Would Ethereum still be the legal currency of token offerings? Nobody knows. Does it matter? Not that much. There will be another blockchain to take its place and when that happens, the whole cycle might just repeat itself. Through this evolutionary period, one thing is for certain. Digital assets have cemented their position as an asset of value. Be it Bitcoin or Ethereum (whether fungible or non-fungible), there is now a baseline hygiene value that people can attach to such an intangible asset. With that, there is therefore still a need for managing, safeguarding and securing such digital assets. More so than ever as institutions and family offices plot their next strategic move of acquiring digital assets on the next wave up. Without these basic functions that would be required either by necessity or regulations, serious money (fiat) would likely be more cautious in venturing into such an asset class albeit the potential.
Should every requirement be decentralized? We think not, there still needs to be recourse and responsibility; both of which are still very much lacking in the blockchain industry. Similarly, with how there would still be a level of intervention by governments in terms of regulation, there should be a slow easing to decentralization even for custodian solutions. Until such a time when the industry has matured, a centralized digital asset custody solution would fulfill current and near future institutional needs.
And this is why we are still doing this.
