Cryptocurrency asset management is when a cryptocurrency investor trusts another party (cryptocurrency asset manager) with his/her crypto assets to manage on his/her behalf. The cryptocurrency asset managers help in keeping track of price fluctuations of the digital assets and buy and sell the crypto assets on the investor’s behalf. The investor on the other hand gets the chance of investing in different cryptocurrency assets without having to hold an array of cryptocurrency wallets since the cryptocurrency asset manager is the one holding the crypto assets. Cryptocurrency asset management offers a great opportunity for the Crypto beginners who have very little knowledge about crypto assets as well as those investors who have limited time to keep on following the market fluctuations.The investor enters into a contract with the cryptocurrency asset manager. To begin with, the investor deposits funds with the management fund of the cryptocurrency asset manager, which is a collection of funds from different investors who have trusted the cryptocurrency asset managers with their crypto assets to manage. Since the field is still growing, most of these funds are mutual funds or quasi hedge funds. Then the investor will have to wait for a given period of time, known as lock-in period, before getting their payoffs. At times these lock-in periods can be quite lengthy and a lot of patience is required.The cryptocurrency asset managers employ a number of strategies which include investing in the Initial Coin Offering projects, Cryptocurrency Day Trading as wells as holding long term bets on new blockchain startups. Some managers are also tokenizing the funds.It is however very important for the investors to do a thorough research about the asset managers so as to ensure that they are transparent with how they run their operations and also get to know their investment returns. The more transparent the fund is in terms of operations and returns the more confident an investor can be that his investment will give profits after the lock-in period.
The Three Layers of Cryptocurrency Security
Bitcoin being the pioneers of cryptocurrency, is based on decentralized architecture, which implies no servers. Every participant can take part in the transactions. Let’s, get back to the topic under discussion that is hierarchal natured cryptocurrency’s security. There are three functional layers, first and outer being the coins/ tokens, second exchanges and third and inner most is wallet.
First Layer: The coin and tokens formulate first layer of cryptocurrencies. It is the most curtail if this layer is compromised then no matter how secure the other layers are, it does not even count. The layers include coins themselves and tokens. The tokens are based on the features of smart contract of the coins, therefore their security eventually depends on parent cryptocurrency.
Second Layer: Exchange resembles a web service which is deployed centrally on a cloud. Exchange is the component where credibility comes into question. All of the security incidents that are in the news arise from this layer.
Thirds Layer: Wallets being the last layer provides you two options, a hot wallet and a cold wallet. The names seem interesting, so the name hot wallet infer that coins are not under the control of user rather the wallet provider has all of the control over them. Cold wallet is just the software, hardware or even could be a piece of paper.