For the uninitiated, these services pave the way for digital assets to be securely held in large volumes. Some advocates believe that this could be one of the key factors needed to trigger an influx of new capital from institutional investors.
Many of the solutions out there make use of hot and cold storage. “Hot storage” refers to coins and tokens that are held in an environment that’s connected to the internet. Although this means assets are easier to access, this also means there is a higher risk that funds could be stolen through a cyber attack. “Cold storage” involves storing digital currencies away from an online connection. In theory, cold storage techniques are more secure because there is a lower risk of assets being stolen in cyberattacks and hacks. However, as we’ve seen with cases such as QuadrigaCX, even this approach doesn’t offer a cast-iron guarantee that funds will be kept safe.