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The Tortoise and the Hare: How Banks Can Stay Ahead In the Crypto Race

Fortune favors the bold, one can’t help thinking when looking at early adopters of innovative technologies. After all, who doesn’t wish that they had the foresight to mine a few bitcoins back in the project’s early stages? However, while it’s always hard to tell what tech will take off early on, security is the safest bet for investors and adopters alike. 

Cryptocurrency and its pathway to institutional adoption are great examples of that. Digital assets promise a massive boost to their early adopters, but they come with risks attached—risks extending beyond their volatility and unclear regulatory status. Hackers are always looking for profits, and virtual assets are lucrative for the digital underworld.

Banks already face challenges when it comes to security for traditional assets, with hackers and thieves becoming increasingly sophisticated. Though institutions invest heavily in fortifying their operations from advanced breach attempts, they often lack an in-depth understanding of digital assets’ specifics, which is crucial for guaranteeing security for their clients. Blockchain is by design more tamper-proof than a centralized database, but hackers do follow the money, so they will take a stab at stealing digital assets anyways as long as the returns are worth the investment. Thus, security should not be taken lightly.

Storage and custody are the most crucial components of crypto services from a security perspective. A mistake on this front is sure to result in a headline-making hack that will cost the bank the brand image it had been building over decades. For banks to stay ahead of the curve and out of the bad press, it’s imperative for them to understand the importance of self-custody.

Self-custody means that the bank is in full control of the private key to the wallet holding its clients’ digital assets instead of outsourcing the matter to a crypto exchange or a specialized custodian. This approach mitigates third-party risks and allows banks to take full ownership of their own services and policies instead of being beholden to the capabilities and risk appetite of a third-party service.

When building their self-custody, banks must make sure to follow the best security practices. As of right now, the best strategy is to use a solution that incorporates both cold storage, i.e. a vault that remains offline, and multi-party computation (MPC) wallets for high-speed transactions. GK8’s regulation-ready platform brings both capabilities to the table, including the only true cold vault in the market, which does not need to go online to sign off and send a transaction.

With proper security in place, banks can tap the blockchain ecosystem to greatly expand their revenue streams. There is more to this than the coveted status of a trailblazer: Banks can gain access to whole new classes of digital derivatives, build unique on-chain financial services, tap high-APY DeFi yield protocols, and take part in native staking, helping to support the operation of Proof-of-Stake blockchains. These opportunities will greatly expand their overall revenues and give the early adopters a monumental edge over their competitors.

GK8’s platform supports all of the above with its unique features including Cold Staking, which allows banks to stake their assets without exposing them to hackers, and general smart contract support, which allows for instant integrations with any DeFi services on supported blockchains. The platform also features instant integrations with any Ethereum Virtual Machine-compatible blockchains, guaranteeing its users maximum versatility, and features an option to access insurance of up to $750 million per Vault—the highest one in the market.