What really is so difficult about storing digital assets?

Access to a digital asset or cryptocurrency or token is granted by a private key. (this is a string of letters and numbers jumbled into jibberish)

When you want to move your asset, you sign the transaction with that private key. The transaction is then broadcasted to the blockchain network to be validated. A valid signature can only be generated by the owner of the corresponding private key.

This means that if the private key is lost, stolen, forgotten or gone up in to a magic puff of smoke, your assets are gone forever. (the most frustrating thing is that you can look at them on the address but have no access)

SO, in order to safely store digital assets, it is VITAL (Super duper important) that the private key to those assets is kept safe.

How do you keep the key safe?

• Option1: Store on a (online and protected) server
  But this is kind of a red flag for hackers to try and find a loophole to steal your key. And again, once the key is gone the asset no longer belongs to you (even if you think it should). Transactions on a blockchain cannot be reversed. Such is the nature of the beast

• Option2: Store the private key offline,
  There are a few options there but you could write it on a piece of parchment (that can burn, get wet, get thrown away of fade) or a hard drive/USB stick that is locked away or hidden (but not to well) in a fortified, remote location.
  This is a lot more secure but that means that every time you want to sell or move you have to phisically go to the key. That might be a solution for a private person (look up hardware wallet) but not really when you need to transact a lot in a coorporate setting.

So the whole thing is a balancing act between security and convenience. The Custody solutions generally incorporate a combination of hot storage(option1), and cold storage (option2)

Storage is even more difficult if you are storing the assets of someone else as a company.

• In theory (has happened a few times) you could take the key and dissapear into the night with the money (better fake your death though)
• So there have to be solutions that allow for the key to be stored in parts with several different persons to make it harder to steal physically. This is called multi signing.

This has been one of the bigger challenges to the whole crypto sphere and has kept a lot of bigger players from investing but these days more and more custody solutions are coming online (and offline) which provide means for bigger investors to start dabbling in crypto with a few million.

That for me is one of the bullish macro trends in the whole crypto landscape and will only propell the prices higher in the years to come.

how do you store your crypto?