Explore the broader digital asset and cryptocurrency market IBM Supply Chain and Blockchain Blog

Share this post:

Cryptocurrency and wider Digital assets As the entire industry’s regulatory bill has been submitted to the Senate in Washington, DC, and prices have risen to record highs, the evolution continues to develop in earnest and shows signs of maturity by 2021.Although price increases tend to attract attention, compared with transaction volume, throughput capacity, unique user addresses, and locked funds, price has become an increasingly unimportant indicator of the strength and health of the broader digital asset space. Smart contract.

Recent price fluctuations are a risk; however, the number of core investors and users who have long-term investment horizons and are willing to hold under these conditions continue to grow.As this core investor grows, so does the demand for digital assets solution Provide safe products, customer service and comply with regulations.

Understand how digital assets can improve security and scalability to speed up settlement

Bridge the gap with hosting solutions

Digital asset custody solutions are some of the most important market solutions to the security and risk issues of institutions and other investors waiting to explore the latest asset classes. They are important to bridge the gap between mainstream and institutional adoption. Let’s take a look at two types of hosting solutions.

Self-hosted solutions

Storing private keys through wallets (hardware and software) relatively provides better security. Although everything in life has shortcomings. Through self-custodial, the burden of keeping your own keys can lead to loopholes and potential loss of assets. An example of this is the exchange wallet: a solution where investors trust the exchange to control and manage public and private keys. The exchange owns the ownership of private keys and digital assets. Therefore, you have counterparty risk and mixed custody of digital assets.

Third party custodian

They provide storage and custody of digital assets on behalf of their customers, and they usually charge a fee. We found that due to increased security and insurance, more institutional investors are using third parties instead of retail. The advantages of this hosting solution are flexibility and additional security-but these also come at a price.

The digital asset custody solution aims to provide institutional investors with the same peace of mind as the solutions of daily retail investors and their custody wallets when trading in the traditional capital market through their main brokers. There is a clear understanding that banks are responsible for the security of investors’ funds and the privacy of their financial and personal information.

Industry trends in the field of digital asset custody

Digital asset custodians face similar responsibilities in a highly innovative market where there are horror stories about individuals’ inability to access their assets and the tools used to protect sensitive information (such as private keys). Although some of these horror stories are true, incredible innovations have also emerged in the field of custody to protect accounts and make the storage and access of digital assets more secure than ever.

Different types of hosting services for different customers include:

• Institutions only
• Retail/Institutional Hybrid
• Hardware/Technology Provider

With the addition of financial and financial technology companies, the number of digital asset custodians continues to grow. Like traditional capital market services, new asset classes across institutions, retail and exchanges, and hardware providers also need services. In view of the unique incentive structure of various tokens, there are more and more long-term holders, and a secure custody solution is required, which will rely on cooperation with trusted partners such as IBM.

Companies and institutions are also establishing the necessary infrastructure and strategies to achieve long-term exposure. Compliance solutions will become the focus of market participants, so these custodians will be in the best position to handle institutional and corporate capital.

Drive adoption and investor confidence

IBM continues to expand its influence and expertise in the following areas Blockchain technology, Recently announced Established a partnership with METACO, a comprehensive digital asset security infrastructure solution provider. METACO is now leveraging the secure computing capabilities of IBM Cloud and IBM Cloud Hyper Protect Services to further enhance its infrastructure and products Financial Services customer. IBM Cloud Hyper Protect Services on LinuxONE can ensure that applications and private keys are secure and accessible through the enclave supported by the FIPS 140-2 level 4 hardware security module. Defend against external threats by running in a large trusted execution environment with fully encrypted static and dynamic data.

Digital assets have attracted a new wave of investors and innovators. Although they may have different strategies in the digital asset market, they need secure custody solutions. With the emergence of new digital asset custody solutions and brands, which seem to appear every day, it may be difficult for new participants to find suitable solution providers in the market to protect their interests and personal information. IBM and its partners put security first in solution hosting, infrastructure, and compliance to provide customers with hosting solutions they can trust.

Translate strategy into business results

IBM Blockchain Services can help you turn your ideas into reality. Explore the use of blockchain and digital assets in your business.

Connect with blockchain experts