Cryptocurrency deposit - the ability to store a large number of digital assets in a reliable form. And the possibility of using them to obtain a small passive income. Some experts believe that such deposits can play a decisive role in reducing the volatility of cryptocurrencies and attract the attention of institutional investors.
There are two storage methods - “hot” and “cold”. In the first case, the “coin vault” is constantly connected to the Internet. This ensures quick access and high speed of operation but reduces resistance to breaking. “Cold storage”, on the contrary, connects to the network only during the direct implementation of operations. But even this method does not give a 100% guarantee, as the experience of QuadrigaCX shows us.
In addition to the passive income that is typical for all deposits, one more point plays an important role. If you lose or forget the private key to your cryptocurrency wallet, you will lose all assets on it.
If you store your cryptocurrency assets in depositories, then when you lose access, the same mechanisms turn on as when you lose, for example, a classic bank card. That is - there is an opportunity to return the lost. And if we are talking about large amounts, then such security is an extremely relevant phenomenon.
The target audience
Most beneficial, of course, to holders of hedge funds with a large number of cryptocurrency assets. However, this is also useful for ordinary investors - a bit of “centralized security” in the relatively unstable world of cryptocurrencies. And there are already few exchanges that provide it.
In addition, according to official recommendations of the US Securities and Exchange Commission, each investor holding valuable assets worth more than 150 thousand US dollars must ensure that these resources are stored in a safe place under the control of a “trusted custodian”.
Coinbase, for example, acts as a leader because it actively engages institutional investors. Vontobel - because it provides access to the global vault to more than 100 banks and asset managers. Anchorage and Bakkt provide Wall Street investors with the opportunity to trade bitcoins in a familiar, regulated environment. Fidelity and Gemini are exchanges that are also actively working on cooperation with official financial and regulatory authorities.
Chance to become mainstream
Almost recently - in November 2019, the German parliament passed a law that allowed official banks to work with cryptocurrency, and not only trade it, but also store it. Society immediately divided into two large groups. The first believes that this law will strengthen the already largest economy in Europe, making the country a kind of “crypto harbour”. The second believes that the public, poorly versed in cryptocurrencies, will start investing in volatile coins and, naturally, will suffer big losses. However, at the exact moment, neither fears nor rosy forecasts have yet been realized.
In order for cryptocurrency depositories to become really common, it is necessary to solve a number of issues related to the regulation of their work. For this, regular thematic conferences are held. One of them - the “Conference on Cryptofinancing”, was held January 15-17, 2020 in the Swiss ski resort of St. Moritz. The protagonists of the event were the president and CEO of the cryptocurrency exchange Gemini, the twins Cameron and Tyler Winklevoss. And also - Hestre Pearce, SEC Commissioner.
In any case, the prospects for cryptocurrency depositories are not bad. However, the situation should be monitored closely - you never know what strange steps state regulatory agencies can take.