Block-the-Talk; Joseph Massey of 3.0 Verse on the importance of cold and hot wallets for digital assets’ safety
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What are the three best practices that today’s youth should follow when it comes to digital assets?
Today’s youth is well-entrenched in technology, and the first thing they must do when it comes to digital assets is to understand the underlying technology of Blockchain. A user should know what Blockchain is and what are the use-cases and benefits of Blockchain. The second thing the youth should understand is the utility of the use-case, which represents the token vis-a-vis similar other use-cases and their tokens. Lastly, like all other asset classes, digital assets have their inherent risk and rewards based on which the user must decide if they should invest, how much risk they can take, and how diversified their investment risk is. Social media/whitepapers give a lot of information that can provide the details of the digital asset and its journey.
How can Blockchain be used to keep digital assets safe?
Digital assets are kept in a wallet, and these wallets are created on Blockchain, which ensures that trust, transparency and traceability issues are addressed. An individual operates a wallet only by a secret private key; therefore, the wallet is safe until that private key is not made known. The wallets are of multiple kinds. A cold wallet keeps your data offline as it is not linked to a live network. In contrast, a hot wallet is connected through the internet with service providers for debit and credit. It is generally connected with CeFi exchanges or custodians, or DeFi platforms. One can create multiple wallets. One can keep digital assets safe by keeping most of the holdings in a cold wallet and some in a hot wallet for transfers.
Which are the apps consumers can use?
Consumers can use exchange-specific Apps or 3.0 verse App, an aggregating app which converges all major CEX and DEX markets and multiple coins/tokens to a single app, so that clients can keep information on a single App instead of keeping it on multiple apps. There are a lot of data safeguards implemented by the 3.0 verse.
What are three tips you would like to give to people who dabble in crypto trading?
Read, Research and Know the market information before taking a deep dive in the market or asset. Any market at this early stage of evolution exhibits very high volatility, and information asymmetry is at the root of it. While most of the coins represent the efficiency and innovation of the use-case that is represented by these coins, a few lack governance, either innocent or intentional, and it is not uncommon. Due diligence is essential.
Another critical point is understanding the risk and assessing the comfort with price variation. The point in context is a 20% variation in an equity portfolio, which creates discomfort for many, while it is widespread in a crypto portfolio.
The third piece of advice would be to consider the crypto asset as part of a diversified portfolio and allocate the resource that fits the individual’s wealth planning.
Which, according to you, is the country leading in the space, and can the Indian start-up ecosystem pick up the best use cases?
Any business that deals with a lot of data, use of data, data integrity and change in data has a potential use-case of using Blockchain. Government records, healthcare, FinTech, banking, education, e-commerce, etc. are some industries that can easily look at the use-case of adding efficiency to their businesses.
What are the disadvantages of Blockchain?
The Blockchain sometimes takes higher time to reconcile records and associated costs. However, the progress made in last few years has brought in efficiency and cost effectiveness. Besides, there are hacking issues at different levels in the Blockchain ecosystem. However, custodial solutions and other measures can help mitigate these risks. We see gradually, more security features, insurance, compliance expectation would build greater safety, usability and protection to this technology and its wider adoption and application.
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