What is a custodian, and why does Cryptocurrency need them? This question and answer first appeared on Quora, a place where people can learn from each other and better understand the world.
Answer on Quora from Matt Leitch, who works as a social media marketer for Internet Pulse:
Let’s start by talking about the past. A few surveys have shown that about 20% of family businesses around the world have invested in cryptocurrency, and about 30% of family businesses in the United States have done the same. Now, about half of businesses around the world say they are interested in doing it.
It is said that most of these businesses have a lot of money to invest in the long term. Also, most family businesses are expected to not only do well but also to grow and reach new heights. Their goal is, of course, to find new ways to make money by spreading out their assets. Recently, rising inflation and interest rates are also making this family project less likely to be successful. Due to the many risks they need to be aware of, like the market’s volatility and the possibility that the law will change, family businesses need to be careful with any investments they make in the digital asset market.
Asset custodianship has traditionally been the job of financial institutions in the capital market. This means that they are in charge of taking care of and protecting investors’ assets. They may also be asked to do clearing housework, settle trades, provide exchange services, and carry out corporate actions.
Read More: How to securely store cryptocurrencies?
To prevent fraud, theft, or loss, custodians only hold assets for a limited duration. Cryptocurrency Custodions are needed 100 times more as crypto investments rise. Cryptocurrency rules differ from fiat money rules due to their variances. Digital assets too. I think this is why so many new assets find value and produce volatility.
Cryptocurrency Custodions make sure that their clients’ cryptocurrency assets are safe. The main difference here is that the crypto custodians only hold the keys to these assets, not the assets themselves. The keys to your assets can be stored in a cold wallet that only you can access.