The Challenges of Storing Crypto
2 May 2019
There are significant barriers to entry for those looking to invest in cryptocurrencies. It can be challenging to work through the complexity of investing in this asset class – buying bitcoin and other cryptocurrencies, processing transactions and ensuring that the crypto assets are safe and secure.
For those investors who understand the risks and potential rewards of cryptocurrency investing but do not have a technical background, storage becomes a real issue. They may buy crypto but simply leave their assets on an exchange.
Others with a stronger technical understanding, may have their own wallet. Still facing the risk of losing their private key - a sophisticated form of cryptography that allows a user to access their cryptocurrency. Think of it like a bank login to access your money.
As an investor you need to protect your key. Yet some investors simply record their private key on a piece of paper . This system is susceptible to both water damage and mice.
Once you have lost your keys, then you have lost your assets. It’s game over, no extra time, no right to appeal. There is no encore. The bitcoin price becomes irrelevant if you have lost your assets.
Fortunately, the infrastructure has developed, so investors, especially larger investors, can outsource their storage solution to an expert in this field. These entities are specially built to store digital assets, providing their customers with an advanced cold storage solution. The wallet is stored on a platform that is not connected to the internet, offering protection from unauthorized access or cyber hacks.
As the cryptocurrency market matures so does the solutions to address the challenges of investing in this asset class. Gone are the days of writing your private keys on scraps of paper, which is good for investors if not bad for the mice.