Where risk shows up

Some features of digital assets deserve a closer look whatever your role. They aren’t risks on their own. They’re places where risk can come in, so they’re good places to start asking questions. You still have to decide what each one means for you.

• Blockchains: transactions are very hard to reverse, so a mistake or a theft can be permanent. Public blockchains have no company you can call when something breaks, and they can slow down, go down or change their rules.
• Tokens: a token is only worth what stands behind it. Ask who issued it, what backs it, what legal rights it gives you, how sharply its price can move, and whether you could sell it quickly if you needed to.
• Smart contracts: the code does exactly what it says, bugs and all, and it can be hard to fix once it’s running. Some contracts let an administrator pause or change them, which is a control and a risk at the same time.
• Keys: whoever holds the secret key that controls a digital asset can move it. Lose the key and the asset may be gone for good. Let someone steal it and they can take the asset.

Take each feature back to your own role. For a custodian, losing a key is a central risk, because it holds the keys for clients. For an advisor, the same feature matters mostly when choosing which custodian to recommend. Same feature, different risk. That’s the habit to build.