This article discusses how family offices can incorporate digital assets into their business activities or look at them from an investor perspective for diversification. It explores what digital assets are, how family offices can seek exposure to this new asset class, and what hurdles they must overcome. The article suggests that incorporating digital asset capabilities can lay the groundwork for a better understanding of digital assets as portfolio investments and can lead to a competitive advantage. However, the article also highlights the roadblocks and opportunities associated with investing in digital assets and advises family offices to invest time and resources in understanding the technology, the risks, and the potential early on.
Crypto bridges are a tool that enables the use of assets on one blockchain on another without transferring or exchanging them, solving the interoperability problem between blockchains. However, this solution has become a popular target for hackers, with an estimated $2bn stolen from bridging solutions in 2022 alone. Crypto bridges can be classified into various categories, including asset-specific, chain-specific, application-specific, and generalized bridges, each with a specific purpose. They can also be classified by their security mechanism, including trusted, trustless, insured, and bonded bridges. While many crypto bridges use varying degrees of trustlessness, they present risks associated with smart contract risk, technology risk, censorship risk, custodial risk, collateral as a target, under-collateralization, and loss of collateral value. The rise of crypto bridge exploits has led to the need for improvement in security and reliability, with developers needing to accept responsibility and prioritize the protocol’s security over all other aspects.