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What Are Cryptocurrency Custody Solutions? WeGain Tech

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What Are Cryptocurrency Custody Solutions? WeGain Tech

Cryptocurrency custody solutions are independent storage and security systems used to hold large quantities of tokens. Custody solutions are one of the latest innovations to come out of the cryptocurrency ecosystem and have been expected to herald the entry of institutional capital into the industry. Here is a brief primer on why crypto needs custody solutions, and the types of custody solutions being offered in the market. 

 

The main utility of cryptocurrency custody solutions lies in the safeguarding of cryptocurrency assets. Private keys, which are used to conduct transactions or access crypto holdings, are a complex combination of alphanumerics. They are extremely difficult to remember and can be stolen or hacked. Online wallets are a potential solution but they have also proven susceptible to hacks. The same is true of cryptocurrency exchanges. 

 

Other solutions include storing private keys offline, on paper, or on a hard disk (or other electronic equipment) that is not connected to the Internet. But losing physical custody (or either the paper or electronic equipment) is a real possibility, and in those cases, recovery of the cryptocurrency holdings can be impossible. For individual holders of bitcoin, the possibility of losing private keys is a risk; for institutional investors, though, it represents an even more significant risk. The latter go to extreme lengths to guard against this danger. Some major investors have even been known to distribute portions of a paper wallet across numerous storage units in different locations.

 

The other important reason for the existence of cryptocurrency custody solutions is regulation. According to SEC regulation promulgated as part of the Dodd-Frank Act, institutional investors that have customer assets worth more than $150,000 are required to store the holdings with a “qualified custodian." The SEC’s definition of such entities includes banks and savings associations and registered broker-dealers. Futures commission merchants and foreign financial institutions are also included in this definition. Within the cryptocurrency ecosystem, very few mainstream banks offer custodian services. Kingdom Trust, a Kentucky-based custodian, was the largest such service for cryptocurrencies until it was purchased by BitGo, a San Francisco-based startup. 


WeGain Tech is also developing decentralized systematic investment plans where automatic investment on regular intervals is possible with as low as $10. The WeGain Team combines a passion for perfection, expertise, & a proven record in finance, development, marketing. The Cryptic Team combines a passion for esports, industry expertise & a proven record in finance, development, marketing.

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