- Hardware Wallets
Ledger Nano Sand
Trezor are great options (
among many others!
) for a hardware wallet.- Paper Wallets
A paper wallet is one of the easiest and safest types of wallets, and is basically a QR-coded printout of the access keys. These can be generated via programs that randomly generate the private and public keys. But, as it’s simply a piece of fragile paper, make sure to keep it safe from environmental destruction, thievery and human error.
Your wallet is only as secure as your practices. As a rule of thumb, make multiple encrypted backups of access keys and seed phrases. Use reputable wallet services and make sure to employ updated software with the latest security enhancements. Implementation of extra layers of security protocols, two-factor authentication, and long and lengthy passwords help to dissuade potential attacks from hackers. Remember the golden rule: store just a small amount on hot wallets, keep the rest tucked away safely in cold storage.
- Future ways of handling custody of crypto
We have previously discussed all the ways of storing crypto and issues associated with keeping your funds on exchanges, but there are many potential problems that might arise as a result of the fact that keeping custody over your funds in a sovereign way for many non-tech savvy participants might be an extremely complicated process.
But why do we take ownership of the tokens in the first place?
Cryptocurrency market participants are currently mostly owning coins and tokens in order to get exposure to their price movement. Many of the digital assets sold as utility tokens still require the development of the associated platforms and the ones that can be used for a certain utility at this point in time, lack a proper hedging mechanism.
Due to the aforementioned factors, it is very important to enable the price exposure to digital assets without having to take ownership of them. That’s why decentralized derivatives were created. These types of contracts do not need to directly exchange asset A for asset B to be exposed to it, so there is no risk from issues associated with transactions. But you still need a safe and trustless mechanism for custody of asset A and settlement with the other side of the trade.
- The solution: smart contracts.
All funds that are traded using these type of contracts are deposited into the smart contract collateral pool which is connected to another smart contract that holds any remaining funds that are not traded.
In order for crypto assets to be used for the specific purpose they are created for, besides having a platform built that would require them as a payment or participation mechanism, we need a “tool” that would help us keep their valuation more stable. For example, if you’re using Siacoin to pay for cloud storage, you want to be sure that the value you are getting for your money is better than traditional services, which is highly dependent on the actual price of the token. Besides the hedging, derivatives are contracts that represent a good price discovery mechanism, that can help decouple token utility from market volatility.
For the cryptocurrency markets to evolve and reach a higher level of mass adoption, we need to build safe and trustless frameworks for custody and trading of assets, and also empower participants that want to consume the utility of tokens and associated platforms with a way to achieve higher price stability.
Bio: Collins Brown is the CEO & co-founder of decentralized trading derivatives platform,
MARKET Protocol. Previously he was a traditional financial trader and cryptocurrency hedge fund manager.