From securing private keys to facilitating the buying, selling, and all-round management of digital assets, institutional, independent crypto custodians quite literally provide an invaluable service to the budding industry. But why are they required and how do they work?
When it comes to cryptocurrency private key storage and management, not everyone is as cautious as they should be. From storing the majority of funds on a centralized exchange to maintaining poor self-custody standards, many institutional investors expose themselves to what has been dubbed by accounting firm KPMG as a “high level” of risk.
A recent report from the accounting giant argues that, despite their growing prevalence, cryptocurrencies are still inherently exploitable. According to the report, $9.8 billion worth of crypto has been stolen since 2017, with the main offenders being improper coding and security.
Given this, it’s no surprise that crypto tycoons go to extreme measures to keep their virtual stash safe. A good illustration of this comes from former Facebook feuders turned Bitcoin billionaires, Cameron and Tyler Winklevoss—known collectively as the Winklevii. The twins revealed their unique approach to custody in a 2017 interview with The New York Times. To secure their fortune, the Winklevii reportedly cut a printout of their private key up into segments and stored them in multiple safe deposits around the United States.
While not everyone is likely to adopt that methodology, it goes to show the extent some are willing to go to keep their assets secure.
Read or listen to the full article authored by Trustology CEO and Founder, Alex Batlin, as published in ValueWalk.