In a recent survey of our clients, 71% said they feel safer having their digital assets stored with an institutional custody provider as opposed to storing their own private keys.
Investors cited two main reasons why they prefer institutional custody over self-storage. The first reason is the complexity and risks associated with generating their own private keys and having to securely store them as well. The second reason was around beneficiaries and how only proper custody allows their loved ones to be able to redeem the digital asset wealth if the owner passes away.
The complexity of Setup and Management
Traditionally in the crypto space, one has to generate private keys with hardware devices. Store your device and keys somewhere "safe" and make sure you didn't make any mistakes. Transfer your crypto from exchange to a device without screwing up, or you could lose your crypto.
Risk of Single Point of Failure
With 100% of the investment's validity based on the user themself, this creates a single point of failure. Should the keys get lost or stolen, you can lose everything. Should the wrong person find out about your wealth being held in this manner, you could be susceptible to theft.
Risk of Death
Many investors have fears that if they pass away, their family (or friends) will not be able to recover their assets. This is almost always the case with self-storage of private keys. Since private keys are meant to be private, most investors don't leave detailed plans for their heirs about where to find their private keys and how to recover them - this creates recovery issues upon death.
Luckily with iTrustCapital, we have a built-in recovery plan that all clients use when creating an account with us. Our clients provide information on their beneficiaries, so if something suddenly happens to a client, the beneficiaries have the full legal authority to recover all digital assets.
When looking at existing major asset classes like Stocks and Bonds, very few investors choose to protect physical stock and bond certificates in their homes. Since the beginning of modern economies, individuals have found solace in their ability to store their wealth with a trusted source who specializes in security and storage. The crypto industry has seen the space become more institutionalized over time, which can be seen by custodian news over the past few years.
If you want to learn more about how our Digital Assets are stored, feel free to schedule a call.
Important Note: All investments involve substantial risk of loss. All trading strategies are used at your own risk and you are responsible for the financial resources you utilize. If the market moves against you, you may sustain a total loss of the initial amount you allocated to the investment. you should not engage in trading unless you fully understand the nature of the transaction you are entering into and the extent of your exposure to loss. If you do not fully understand these risks, you should seek independent advice from your financial advisor. iTrust is not an investment specialist, tax specialist, financial planner (certified or otherwise), or retirement advisor, and iTrust does not provide investment advice, tax advice, financial planning services, or retirement planning or retirement-specific advice. iTrust facilitates the purchase of digital currency and precious metals, nothing more, and charges a fee for the service it provides. All investment decisions are made by iTrust users. Please read the full Risk Disclosure.
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