The road to understanding the importance of regulation in the crypto world has been a long and painful one.
Since the inception of blockchain technology, the issue of cryptocurrency custody has nothing to do with the digital assets themselves that exist on the blockchain, but with the private keys required to access them.
If the private key is lost, the assets it unlocks remain immutable on the blockchain and can never be accessed. The twist of fate depends on the fate of a particular private key. Various methods of storing these have been tried, from strips of paper cut into sections and kept in separate safes, to encrypted vaults in bunkers under armed guard deep in the Swiss mountains.
Making CEX directly escrowed funds quickly obsolete
Few scandals have captured the attention of investors more than the collapse of the world's second largest cryptocurrency exchange.
The ensuing massive bank runs we’ve seen on funds held on other centralized exchanges are a natural consequence of the concerns raised by this disaster, and within weeks of FTX’s bankruptcy,Over $20 billion withdrawn from CEXs。
Ex-FTX CEO Sam Bankman-Fried Faces Laws Over Allowing Custody Funds To Be Used For Active InvestingFunds are heavily mixedSince then, other centralized exchanges have come under greater scrutiny for mixing funds.
Industry Refocuses on Cryptocurrency Custodians
According to reports, analysts at Bernstein recently estimated that the cryptocurrency custody industry will grow from $300 million today to about $8 billion within a decade, and in a recentCoinDesk reportIt is called "the foundational driver of institutional adoption".
In the reorganization process, centralized exchanges are moving towards greater proof-of-reserve transparency and more clearly defining their own cold custody offerings.
Self-custody of cryptocurrencies has its own flaws
Binance CEO Changpeng Zhao recently remarked in a Twitter Space that “ 99% of people today…to hold crypto on their own…will end up losing it”.
Binance CEO Changpeng Zhao recentlyTwitter Space Events"99% of people today... who own cryptocurrency... will eventually lose it," said Zhong.
Of course, CZ has a point - there is a risk in protecting your own private keys which could be lost, stolen or exposed to third parties.
Still, the principle of self-custody remains a crucial one. The ability for investors to custody their own digital assets without entrusting those assets to any third party is a core value and is closely related to the financial decentralization enabled by blockchain technology itself.
Qredo's vision for crypto custody
At Qredo, we believe that you should be able to take custody of your assets directly without any third-party control and without any type of security risk or single point of failure.
We also believe that robust and mature provisions addressing this issue are critical to supporting the continued growth of the blockchain industry and helping institutions enter the space with agility and real confidence.
Qredo's Solution: Decentralized Self-Hosting
Custodians are likely to rise in the crypto space, as Bernstein predicted. They've gotten more attention since FTX's downfall, and they may be raising their bar too.
But what if there was a way to retain all the benefits of self-custody without the risk of exposing or losing your private keys?
Decentralized Multi-Party Computation (dMPC)Decentralized Multi-Party Computation (dMPC)。
Using our dMPC-powered Web3 wallet, users and teams are able to fully maintain self-custody of their digital assets without the security risks and scaling issues inherent in existing self-custody solutions such as cold wallets.
The computation required to access the Qredo Web3 wallet is distributed across the Qredo network in such a way that no one on your team needs to hold the private keys. This of course eliminates the risk of team members losing their private keys, inadvertently sharing private keys, or anyone losing or damaging a physical cold wallet.
In our Web3 wallet, policies can also be set to manage and define in detail which individuals in an organization or team should have access to and manage digital assets,Detailed customization is just a few clicks away。
With Qredo's revolutionary technology, the network is the vault, when it comes to crypto custody, you can truly have the best of both worlds - keeping all the benefits of self-custody of your digital assets, but without any of the potential downsides.
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Original link:https://www.qredo.com/blog/why-is-crypto-custody-so-important
Qredo Chinese page:qredo.com/zh-cn
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