Digital Assets: A Primer
When thinking of digital assets, cryptocurrency often comes to mind. However, currencies such as bitcoin and Ether do not capture the full range of possibilities offered by digital assets. For example, we expect increased tokenization, whereby rights to physical assets are represented digitally as tokens on blockchain networks. Rather than allow multiple intermediaries to control their assets, savvy consumers will look toward tokenization as a more direct and untainted method to verify ownership of their assets. We have begun to see planned projects to tokenize property, commodities, and other tradable goods. Examples include a fine art auction house planning to distribute tokenized fractions of a Picasso painting, a New York property owner tokenizing a $30 million luxury condo, and an energy startup creating tokens to represent units of electricity. The possibilities are endless.
The influx of new digital assets requires secure storage. Cloud services are easily hacked, while conventional storage devices may be lost, stolen, or damaged. Should that occur, the private keys that allow individuals to control their digital assets could be lost forever. A primary benefit of public blockchains is the immutability that results because there is no central authority that can mandate a change to a public blockchain network. The trade-off is that when a private key is lost or stolen, access to the corresponding assets and funds is lost as well.
To address this issue, Blockchains is developing a hybrid “hot” and “cold” digital asset custody solution. While hot and cold (online vs. offline) storage are important within blockchain-based decentralized systems, neither method can independently provide both robust digital asset protection and accessibility. We combine both in our solution to empower individuals to safely and directly store, access, and manage their digital assets.
We do not want to control anyone’s data, information, or assets; we seek to empower the individual. In pursuit of this mission, Blockchains is working to develop a formidable series of executable distributed code contracts (EDCCs), commonly referred to as “smart contracts,” built on the public Ethereum blockchain to provide individuals with direct access to their assets.
On the cold storage side, Blockchains has procured several highly secure properties in the US and Europe to store private keys in a distributed manner, thereby shielding them from vulnerabilities and threats in any one location. In 2018, we acquired two decommissioned military communications bunkers in Wyoming and Georgia and a modern-day fortress within a granite mountain in Switzerland. We are currently in contract to purchase another large bunker in a Swedish mountain. Electromagnetic pulses (EMPs), which can disrupt and destroy electronic data, are a likely attack vector for future cyber warfare, so we are ensuring that these bunkers are EMP-resistant repositories for personal data and digital assets. Once built to our specifications, these facilities in three stable countries will offer unmatched digital asset storage protection.
To ensure individuals’ data is safe not only physically but also digitally, and to maintain the integrity of our digital asset custody solution, we plan to employ best account-security practices – all while enabling necessary account access and management.