What is Asset Preservation?
Asset preservation, or wealth preservation, is the practice of protecting one’s assets from potential risks such as inflation, market volatility and legal liabilities. It involves strategies to reduce risk and preserve capital for future use. These strategies can include diversification into different asset classes, using investment vehicles such as tax-deferred accounts to minimize taxation on capital gains, hedging against currency fluctuations with foreign exchange options contracts and other derivatives instruments, investing in gold and other precious metals for long-term stability or utilizing tax planning techniques like estate taxes exemptions when passing wealth down generations.
In cryptocurrency markets specifically there are a variety of tools that investors can utilize for asset preservation purposes which include cold storage wallets (aka offline wallets), multi-signature transactions/accounts that require multiple users in order to authorize any movements of funds out of an account thus preventing “hacking attacks” by malicious actors; certain smart contracts protocols enable decentralized autonomous organization (DAO) structures where decisions related to moving funds must be approved through consensus mechanisms amongst token holders; hardware based security keys providing additional layers of authentication prior allowing access to user accounts etc..
