In encryption, asset theft, hacker intrusion and password loss often occur, which will cause certain losses to our assets. In order to maintain encryption assets, we need to use encryption hosting. So, what exactly is encryption hosting? What are the types of cryptographic hosting service providers? Next, let's have a look.
Crypto hosting is a term used to describe the process of maintaining assets against theft. A custodian is generally a third party employed to manage cryptocurrencies for you. It can be used as a guarantee for your funds, whether in cash, securities, gold or virtual assets. Since 1960, custodians have existed in finance, which is one of the supports of the traditional banking system.
At the level of cryptocurrency custody, custodians work differently. The digital asset custodian does not store any assets, because all data and transactions are stored in the public ledger called blockchain. On the contrary, they protect the user's private key, which is one of the most important parts of the encrypted wallet. You can browse the funds through private discussions.
Encryption custodians are particularly important for the universal selection of digital assets. So far, many institutional investors have avoided purchasing digital assets because they feel that cryptocurrency lacks security. Regulators require institutions that manage large amounts of funds, such as hedge funds, pension funds, investment banks and family offices, to have a custodian partner to ensure the safety of their customers' property.
As more and more institutional investors begin to enter digital assets, and companies such as MicroStrategy begin to put a large number of cryptocurrencies on their balance sheets, the demand for cryptocurrency custody services increases sharply. A report by Blockdata shows that from January 2019 to January 2022, the scale of digital assets under custody has increased sevenfold, from $32 billion to $223 billion.
Crypto hosting providers are enterprises mainly engaged in secure storage of cryptocurrencies, and these companies are very important. Although the services (secure storage of digital assets) provided by these cryptocurrency custodians are the same, there are some differences between providers. These differences depend on the types of assets they protect and whether they are under control. These custodian customers also have different regulations; Some people may want to manage digital assets on their own, while others want the assistance of a compliant custodian. Qualified custodians are institutions that are permitted by regulatory authorities to own assets on behalf of customers. These companies generally provide direct custody and self custody services.
These companies build their own hosting solutions and retail them directly to end users to ensure the security of customer data. They also maintain high net worth personal (HNI) crypto wallets. Examples include Casa, Nuri, and Lykke.
Institutional and retail services using internal custody technology: These companies use internal technology to provide custody services for banks and individual investors. Institutions and retail service providers provide private key wallets for self hosting of customers' cryptocurrency accounts. For example, Gemini, Binance and Coinhouse.
These companies provide custody services to retail customers by allowing them to purchase and store digital assets. For example, PayPal, Revolut and Block.
Institutional services using third-party custody technology: These companies want to store digital assets on behalf of their customers. However, due to the lack of in-house expertise, they use external vendors to release their hosting technology. Such as BNYMellon, Komainu and BBVA.
These companies, as infrastructure service providers for digital asset custody, provide software and hardware infrastructure to store private keys based on providing a flexible environment for trustees to meet their project needs. Their main clients include corporate institutions, exchanges, financial services companies, artists and trading counters. Such as Fireblocks, Metaco and Taurus.
These companies build digital custody solutions, which are distributed to hedge funds, family offices, endowment funds, exchange traded funds (ETFs), pension funds, asset management companies, pension funds and sovereign wealth funds. Such as AnchorageDigital, BitGo and HexTrust.
Speaking of this, I believe you have a certain understanding of what encryption hosting is and what types of encryption hosting service providers are. In general, as digital assets become mainstream, business opportunities continue to grow. These include stable currency, central bank digital currency (CBDC), security currency and NFT. Hosting services are a key consideration. These services can be used as a trust for depositing stable currency or CBDC, and are equally important for monetized financial products. As the demand for new asset types increases, the market will continue to grow. In the next few years, it is estimated that more retail and institutional customers will choose custody services for their digital assets.
