In March, it was reported that IBM and international investment bank Barclays will enter the encrypted digital currency custodial field. New York investment company Shuttle Holdings will launch a beta version of its digital asset custodial solution based on IBM’s private cloud and encryption technology. So why is the digital asset custodia so hot suddenly?
Due to the increasing number of encrypted digital currency users, it has received the attention of normal financial institutions. According to the data of Statista, by the fourth quarter of 2018, the number of global wallets users was close to nearly 32 million, and the total market value of digital is about $130 billion.
But as people become more aware of digital currencies, the issue of the security of digital asset becomes more important.
The three major difficulties of digital asset are as follow:
1. High miner fee
Whether it is or , the more popular mainstream currency, the higher the miner fee to be paid when transferring the currency. This is the headache of many digital currency investors. For example, imagine that the transaction fee for each transaction is nearly $1. Thus, the high transaction costs make a high barrier for the investors.
2. Slow speed
Besides the high miner fee, the transfer speed for the mainstream currency is too slow. Due to the increasing number of nodes for the mainstream currency, each packaged block size is getting bigger and bigger, and the node broadcast confirmation for every transaction is more and more time-consuming. For instance, it takes at least one minute for to arrive at each transaction and 40 to 50 seconds for . This makes the user experience digital currency transactions bad, leading to pay by digital currency unwillingly.
3. Insecurity
According to the 360 surveys, currently, there are security risks for 80% of digital wallets on the market. But the risk of asset loss is not entirely due to the design itself and more often is because the user forgets the private key and the mnemonic, causing the asset to be lost.
The custodial is designed to solve these three major dilemmas.
As the name implies, custodial entrusts the private key and digital assets to other organizations for management. The digital currency saved in the custodial can be extracted at any time and anywhere, and transfer and transaction between custodial accounts do not require any commission fee and miner fee. In general, a transaction is fast with low commissions, and there is no need to worry about forgetting private keys and mnemonics, contributing to greatly reducing the risk of asset loss.
This is like the WeChat Pay and Alipay in the digital asset industry. The user deposits the money from the bank card to the Alipay account. And there is no commission fee for the transfer between two Alipay accounts. Furthermore, the transfer rate is fast. However, switching assets between WeChat payment and Alipay will charge a commission fee.
The function of digital assets custodial is not only available to IBM and Barclays. There is a digital — Coin Purse in that also launches the custodial function. But unlike other custodial wallets, through Coin Purse, users can choose to keep their private keys for signature and transfer. Furthermore, users can withdraw coins from the custodial at any time. In addition, Coin Purse custodial account also supports red envelopes issuance, currency financing, , personal lending, etc.
Coin Purse’s custodial is especially suitable for users who are new to digital currency and interested in the digital asset. The experience feeling is close to the traditionally centralized .
Published at Mon, 08 Apr 2019 11:04:49 +0000
