Why You Need a Secure & Compliant Platform to Manage Your Digital Assets

Recent years have witnessed the introduction of a brand new digital asset category: blockchain-based cryptocurrency (fungible) and non-fungible tokens (NFTs). But their growing popularity has come with a cost: the attention of savvy hackers.

Crypto scams and frauds saw a massive spike in 2021, with large and small organizations and individual investors becoming targets. Even the reputable MetaMask experienced a malicious attack in November last year when its users were scammed into thinking they were talking to customer support. By unwittingly sharing screenshots and wallet-access QR codes with the hackers, they lost a total of at least $500,000.

Risk management is a vital component in directing crypto holders towards custodian platforms that can help them safely store and manage their digital assets. Let’s explore how.

What is a digital asset?

A digital asset can be many things – a PDF, a PowerPoint presentation, a video… To distinguish them, we look at three main characteristics:

  • The item has value
  • It is in digital format
  • It is accessible and distributable

As you can see, cryptocurrency and NFTs tick all the boxes.

And with blockchain being decentralized, you can hold these assets directly, with no need for a middleman. The public-key cryptography (PKC) is a protection system that leverages public and private keys.

Public keys are the enablers of transactions – in fact, many people share them in their Twitter bios and elsewhere on the internet. But it’s the private key you have to watch out for. It’s a unique string of numbers and/or letters that allows you to access your assets and keep them safe simultaneously.

Private keys should never be shared – but incidents occur. Despite the sophisticated security of blockchain technology, a non-custodial setup means you’re in control of your own protection too. This comes with its challenges: Not only do you require some technical knowledge to store and manage your assets, but you also need to maintain security over time. And on top of that, you need to keep the hackers at bay.

The advantages of a platform

The biggest advantage of custodial platforms is that they do all this for you. If you can have someone else safeguard your digital assets, it means more convenience – and less work.

Over the last few years, many providers have emerged to offer user-friendly interfaces for everyone to easily navigate the exciting world of crypto. These providers will store your private key, meaning that all you have to do is remember your login details.

However, unlike these platforms, you might not have access to the latest security innovations and processes, including:

  • Incorporating tested and audited hardware security models
  • Leveraging military-grade encryption
  • Deploying open-source software clients
  • Segregating duties and compliance

Here, the last point is essential. From IBM to Delchain, these platforms know how vital it is to ensure that no one party has access to all components of a transaction. That’s why they integrate diverse functions into a close ecosystem of trusted and distributed services, significantly reducing the likelihood of a threat. 

Another important factor for platforms is being compliant. For example, outside of the US, registration varies in terms of allowances. In Japan, exchange and platform regulation tends to be more progressive, while in India, the government is notoriously known for flip-flopping on its policy.

When looking to store, manage, and execute transactions safely, you should identify platforms that operate transparently, have no hidden fees, offer robust security measures, and are regulated.

As digital assets continue to make their way into the mainstream, securing them is critical. Keep yourself protected with Delchain.

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