In An Online World, Go Offline With Crypto Security
For many people, the unease around cryptocurrency isn’t only about the technology itself but about what can go wrong when access, custody and confidence depend on systems they don’t fully control or understand.
Scott Lester, Director of Crossgate Capital – a New Zealand-based specialist cryptocurrency investment company that has been investing in crypto assets since 2019 – says this is the problem institutional storage is built to solve, and it is one of the reasons Crossgate Capital's structure looks different from DIY (do it yourself).
In everyday crypto, the owner is responsible for safeguarding a "private key", a secret string of characters that controls the asset.
“Lose it, expose it, or store it on a compromised device, and the holding can be gone permanently with no-one to call. Institutional storage reduces the risk of this single point of failure by entrusting the safekeeping of assets to a specialist with the expertise to manage storage effectively,” he says.
A key part of how institutional storage keeps assets safe is something called cold storage. In simple terms, this means the cryptocurrency is held in digital wallets that are kept completely offline, disconnected from the internet. Because hackers generally need an internet connection to reach an asset, keeping it offline removes the most common avenue of attack and significantly reduces the risk of theft.
It works much like keeping valuables in a sealed vault rather than leaving them on the counter. If something is not connected to the outside world, it is far harder for anyone to reach. Holding crypto assets in cold storage is regarded as one of the most secure ways to safeguard digital assets.
“In a world obsessed with being online, our edge is being offline. The safest place for a digital asset is somewhere a hacker simply cannot reach, and it’s harder to hack what isn't connected. That's the thinking behind cold storage, and it's how we approach it," Lester says.
Crossgate's approach
“For Crossgate, cold storage is considered the preferred approach to managing risk in this high-risk asset class. We have been investing since 2019 in a diversified portfolio of crypto assets, and whilst the portfolio may have changed, our laser focus on storage has not.”
Crossgate does not hold its crypto assets on a laptop or a consumer wallet. All of the company's cryptocurrency is held by BitGo, a leader in digital-asset financial services that is purpose-built for institutions demanding a high level of security. For an investor, that means the assets are held by an institutional specialist rather than by an individual managing keys alone.
"A challenge for some people was not whether to invest but a fear of losing their investment through a hack or a lost key," Lester said. "By holding our assets with an institutional specialist like BitGo, we take that anxiety off the table. Investors get exposure to digital assets without having to become their own security expert."
Why storage is a signal, not just a service
“Storage arrangements can indicate how seriously an operator takes the long game,” Lester says. “An issuer that stores its assets with an institutional specialist, has its financial statements independently audited, and uses external price valuation is signalling that it is bringing a professional approach to this asset class. These are the same safeguards mainstream finance takes for granted, and they are increasingly what serious capital looks for before entering crypto assets.”
For those who have hesitated because the complexity of looking after digital assets felt daunting, institutional storage offers a simpler path; one where a professionally managed company shoulders that challenge on your behalf.
