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In the world of digital asset custody, cold wallets serve as the most secure storage option for safeguarding digital assets. However, with this heightened security comes a critical balance to achieve in all digital asset operations — speed vs. security. Institutional clients managing significant amounts of digital assets must navigate this delicate equilibrium to offer both asset protection and operational efficiency to scale effectively in this ever-evolving market.
What Are Cold Wallets?
Cold wallets are a type of digital asset wallet that stores private keys in an offline environment, ensuring that they are not exposed to the internet. By being offline, it significantly reduces the risk of hacks, malware attacks, or unauthorized access — making them a cornerstone for institutions holding digital assets or reserves in their treasury.
While the security benefits of cold wallets are clear, there is a notable downside: cold wallet transactions are slower due to their nature. As cold wallets are not connected to the internet, each transaction requires manual intervention and would shave off time to take action. In a market where adapting to market changes in a speedy manner is critical, this trade-off can be an issue.
Speed vs. Security: The Ongoing Trade-off
In digital asset custody, speed and security are often in tension. Fast transactions are crucial in a volatile market where the price of digital assets can shift dramatically in minutes, but ensuring those transactions are secure is paramount of the offline nature of cold wallets empowers an unmatched security. This is especially so for institutional clients managing large amounts of digital assets.
For many institutional clients, this trade-off presents a dilemma: should they prioritize speed to capitalize on market opportunities, or should they accept slower cold wallet transactions for heightened security? To navigate this decision, it’s essential to explore the key factors that influence both aspects and find the balance that suits your needs.
Achieving a Balance Between Speed and Security
Many institutions utilize a hybrid model to maximize and extract the optimum speed and security for their operations. This means employing both hot wallets for fluidity and cold wallets for asset security. In increasing instances, financial institutions and major exchanges such as Bitkub also employ the services of a qualified digital asset custodian with deep expertise to manage assets in cold wallets in a compliant and highly secure manner with a guaranteed promise on speed.
At Rakkar, the speed-security balance is achieved through a robust framework that ensures timely execution without compromising the protection offered by our cold wallets. Our commitment to operational efficiency and security is evident through the following key strategies:
- Fastest SLA with 24/7 Availability: Rakkar has empowered multiple financial institutions execute cold wallet transactions within just 2 hours, a significant improvement over the industry’s standard of 24-48 hours, making Rakkar one of the fastest digital asset custodians available in the market. Being available 24/7 throughout the year also allows our institutional clients to respond to market changes at any time without delay.
- Fully Segregated Wallets: This ensures that each client’s assets are securely stored separately from other clients and from Rakkar, eliminating any risk of co-mingling while maintaining the highest security standards.
- Security Certifications: Rakkar’s adherence to globally recognized certifications such as ISO 27001, SOC 1 Type 1, SOC 2 Type 1, and SOC 2 Type 2 ensures that we meet the highest standards of security while also providing the operational speed that institutions demand. Our commitment to maintaining these certifications underscores our dual focus on top-tier security and efficient performance.
By integrating a hybrid model to building your custody infrastructure and employing a qualified custodian such as Rakkar, institutional clients can benefit from unmatched security and operational efficiency to stay agile in a fast-moving market.
Conclusion
For institutional clients, the challenge of balancing speed and security in digital asset custody is critical. Cold wallets provide the most secure option for safeguarding assets, but historically, this has come at the cost of speed. At Rakkar, we bridge this gap by offering fast and secure cold wallet transactions through a streamlined approval process, segregated wallets, and adherence to global security standards. By leveraging Rakkar’s custodian services, institutional clients no longer must compromise between protecting their digital assets and ensuring timely access in a dynamic market environment.
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