Purposes of Digital Asset Custody in Financial Freedom

Financial freedom is a priority among many potential investors and users of decentralized finance. Though the concept of financial freedom may vary from one individual to another, there are salient features of freedom such as having a robust financial backup plan. Unfortunately, a large number of people are deprived of this freedom and some have no adequate means to protect their hard-earned financial freedom from threats. Thus, it is necessary to point out common threats to financial freedom and how digital asset custody protects it.

Common Threats to Financial Freedom

Although there are many kinds of threats to financial freedom, some are more common and recurring in nature. Therefore, identifying these common threats is essential to understand the positive role of digital asset custody. 

No or Incorrect Budgeting

Budgets are necessary to maintain financial stability and freedom because these depict the expenses and income clearly. Some budget apps can also depict expenditure patterns and give constructive suggestions to regulate unnecessary expenses. However, many people even after having an active income source do not maintain a budget or exclude important expenses in the budget. This leads to unpreparedness and in adverse situations, can be detrimental to the individual and his family.

Inadequate Emergency Funds

The adequacy level of emergency funds is one of the most common indicators of financial freedom. Individuals with inadequate emergency funds are not financially free. Therefore, it is essential to have a significant portion of income earmarked for emergencies. It can also include investments or having insurance to combat unforeseen situations.

Low Credit Score

Individuals or business entities having a low credit score often become ineligible to take loans. This is because a lower credit score translates into lower reliability. Although decentralized finance such as crypto loans do not take into account this score, it is nevertheless crucial to have a decent credit score. There are many ways of improving credit scores such as minimizing existing debt levels, paying bills on time, and investing in large assets. 

Identity Theft

Centralized finance is dependent upon central banks and government bodies for regulation. However, these have not succeeded in granting financial freedom, and sometimes identity thefts lead to curtailment. Credit card fraud, loan fraud, cyber attacks, and ransomware can lead to financial losses and jeopardize hard-earned financial freedom. 

Benefits of Having Digital Asset Custody

Digital asset custody is replete with many benefits and can secure financial freedom. It also has the potential to narrow the gap of financial inequality. Digital asset custodians provide protection and a range of services that ensure secure storage of financial assets. These custodians are also capable of safely buying and selling digital assets. Most customers have cold and hot wallets for the protection of crypto assets.

Efficiency

Asset custody leads to better operational efficiency for institutional investors. It also saves time and effort and seamlessly manages large digital asset portfolios. 

High-Level Security

Financial professionals design these asset custody to give a high level of security to their users. This is the reason they can protect financial freedom to a large extent. Both cold and hot wallets may have multiple signatures such that keys can be spread across different systems. Many asset custody providers have experienced and reliable support systems to resolve queries too. 

Insurance Facilities

Digital asset custodians not only prioritize the security of their users during transactions but also have insurance facilities to combat emergencies and compensate for losses. 

Flexible Pricing Strategy

The pricing strategy of many digital asset custody is flexible. Sometimes, companies may charge no fees for setting up and having variable pricing facilities from professionals. It also complies with the local regulations set by governments for better consumer protection. 

Also Read- Crypto Exchange Platforms Hold the Key to Popularizing Decentralized Finance

Bottom Line

Digital asset custody is playing a critical role in protecting financial freedom by having sophisticated security facilities. In the long run, these will help in the rapid adoption of cryptocurrencies and improve their credibility among the masses. The features of these custody are highly beneficial for both customers and businesses to efficiently, and securely trade assets faster across different territories. Therefore, financial freedom may become more widespread and less prone to vulnerabilities because of this product.