Why switch to blockchain to store your assets and capital data?

Until now, asset and capital data storage has relied on decades-old technology. This has led to high costs, data breaches, and misconduct by third parties. The introduction of blockchain technology to the wealth industry addresses these issues head-on. Discover how it safeguards your assets and capital information cost-effectively and securely.

Adoption on the rise

Blockchain is one step away from full-fledged adoption by traditional finance (TradFi) institutions. Crypto is its first real-world use case. By 2025, the overall crypto market cap will reach $7.5 trillion. The recent SEC’s approval of the spot bitcoin ETFs for BTC and ETH signals that the adoption wave is nearing.

The wealth industry is typically considered a conservative part of TradFi. Private services and family offices are cornerstones of the industry. The majority of the market players are still running on old business models and tech setups. More importantly, they are rarely able to properly address issues of information asymmetry within wealthy families. The latter is one of the prime reasons for failures in multigenerational wealth transfer, accounting for 31% of total family wealth losses in the process.

But what is the information asymmetry? In short, capital owners avoid disclosing all information about their capital and assets to their families, not wanting to do it too early. However, doing it too late will be impossible. The methods commonly used by most people neither resolve the issue nor allow them to act at the right moment

However, high-income families seek more secure solutions to address the issue. This need is propelled by the following discontents

Capital founders understand everything but do nothing

To date, it is one of the largest global studies on how the rich transfer assets within their families. It evaluates common strategies and risks originating from both planned and force majeure handovers from founders to family members.

Fully 36% of wealth owners are ready to accept a 10-50% loss for a guarantee that the rest will go to the family. Moreover, 86% think their family can't understand data on family assets and capital.

The paradox is that only 4.5% realize their inaction in preventing the information asymmetry shifts the burden of its consequences to their families. The unresolved issue leaves them without the means to tackle the complexities related to intergenerational handovers.

Penguin analytics revealed a lot of immaturity in addressing family wealth transfer challenges. It's a common attitude among high-income families and individuals. However, once they assess the underlying issue behind information asymmetry, they sharply recognize its importance in connection to their family dynamics.

Despite that, no action is being taken afterward. Merely 6% of capital owners have established or are in the process of drafting an assets and capital transfer plan.

The bottom line is that the problem is clear for all the parties involved in wealth transfer. Founders assess risks from gaps in asset data. They are ready to pay to cover them, but not willing to solve them in advance.

This raises an important question: Why is this the case?

Founders’ stress is not remedied

Annually every capital founder loses up to 1/6 of all their assets’ history of origin data. That information is difficult or impossible to restore.

The breakdown clearly indicates the bedrock of the problem. Illogically, it’s the wealth owners' approach to the family’s money and estate that leaves their loved ones in the most vulnerable position during the wealth transfer.

Is there a better option?

Today, decentralized technology supports applications in many industries. Its expansion is reshaping traditional business processes and models. In finance, it enables quicker and more secure transactions, providing a desirable level of confidentiality.

But how can it address wealth transfer challenges:

We’re inviting wealth owners and their families to take a step-by-step approach to explore all the ways to use decentralized and blockchain technologies for asset and capital data filing and storage.

What are the origins?

Blockchain was designed for Bitcoin users and early cryptocurrency adopters. However, its user base has since expanded to include businesses, governments, and individuals seeking new solutions to old problems in transactions, data storage, and digital trust.

In Q1 2024, Bitcoin became the eighth most valuable asset globally by market cap. With a record high of more than $72,000, its market value rose to $1.42 trillion, surpassing silver.

The success of the BTC ETFs launch accelerated the adoption of underlying technology. More and more banks and other financial institutions are moving to decentralized and blockchain-based solutions to guarantee the efficiency and confidentiality of their client operations.

At its core, blockchain is a decentralized digital ledger that records transactions across a network of computers. It does so in a way that ensures security, transparency, and immutability. Its cornerstone is full data encryption.

Traditional ledgers or databases are controlled by a single entity. Blockchain operates without a central authority. Paired with end-to-end data encryption, it makes access to sensitive client information resistant to the possibility of fraud or breaches—a phenomenon now tightly bound to the wealth information storage approaches of the past decades.

What is a smart contact?

Blockchain offers a new way to handle and secure asset information. For example, it enables the creation of smart contracts, which are self-executing with terms that cannot be amended.

This technology by design eliminates the need for intermediaries. It cuts costs and avoids the complexity associated with similar services in TradFi.

Moreover, it provides unparalleled transparency. Once a transaction is recorded, it cannot be changed or deleted. This provides a secure and accurate history of asset movements and ownership.

The latter is highly valuable in the wealth industry. The crystal-clear level of transaction history is key in facilitating smooth intra-family handovers or preparing for Know Your Customer (KYC) procedures.

No room for middlemen?

For a long time, family offices and private service providers faced little competition. It led to high entry barriers and significant fees for their services.

Blockchain cuts costs by reducing reliance on intermediaries. This change is crucial for the new wave of wealthy individuals whose demands are not currently being met.

Penguin Analytics indicates that these groups have low trust in the existing TradFi offerings. They look for cutting-edge technology to obtain full ownership of their assets and capital data, and its future.

According to Penguin Analytics, the current level of market penetration for family trusts is 0.4% in the HNWI segment. For family offices, the rate is 0.7%.

How secure is it?

Blockchain does not offer absolute security, but it offers more security than any other existing technology in the industry. As of now, no known cases of blockchain breaches are reported.

In a blockchain, encryption is a cornerstone:

What is the use case for family capital?

Decentralized technology may improve family capital operations in two main ways. First, it can digitally encapsulate any asset. Second, it enables data exchange in a decentralized and encrypted manner.

This has opened up new paradigms of asset data storage and transfer. Founders and their family members can exchange data outside conventional TradFi-related structures, avoiding the associated risks. As highlighted in Penguin Analytics, 77.6% more often lawyers act unscrupulously toward successors, than toward capital founders.

The new technology allows founders to store a master copy of their assets and capital data in a decentralized way. What are the benefits? Even if an attacker compromises one server, the information stays fragmented and encrypted, ensuring that unauthorized people will not access it.

Is it regulated

The global regulatory landscape continues to evolve across jurisdictions. In the U.S., it is unclear if decentralized ledgers can be the main source for ownership records.

In contrast, some countries have passed such laws. These countries include Germany, Luxembourg, and Singapore. They officially enable blockchain record-keeping.

Smart contracts may also serve as legal proof of the capital founder’s will if needed. Since 2018, some US states and EU countries, Switzerland, Singapore, and the UAE have started developing case law. These laws treat digital solutions (like smart contracts) as complete alternatives to wills.

The industry outlook

Banks and financial firms are increasingly focusing on DeFi. Several prominent traditional finance firms, including BlackRock, HSBC, BNP Paribas Securities, and BNY Mellon, have recently invested in a range of DeFi projects, each targeting different areas within the digital assets space, including the use of blockchain to tokenize real-world assets.

However, at the moment, there is limited utilization of DeFi and blockchain capabilities for multigenerational wealth transfer issues.

Anticipated, yet non-existing solution

Wealthy individuals are eager for a solution to the challenges posed by wealth transfers. Penguin Analytics indicates that they opt for a single, digital infrastructure that can cut out intermediaries and human-related risks in intra-families handovers.

This vision agrees with the findings in Capgemini's 2023 report. The report envisions a future dominated by digital services under a Wealth-as-a-Service model. Presently, no such products are available on the market.

Owner.One’s research team gathered insights on the desirable features of wealth transfer assistance service from the target audience–capital owners with a net worth ranging from $3m to $99m. Interviewees outlined the objectives as follows:

Client apps from brokers, insurers, banks, and payment firms fall short of meeting these needs through a single and holistic digital infrastructure. They serve as mere communication channels between customers and institutions. Their main aim is to simplify client operations and reduce corporate expenses.

In Penguin Analytics, we sampled about 240 software programs used by family offices, lawyers, advisors, and other industry players.

Some of them (30%) mimic online products but they are really just marketing products. Businesses utilize them to find clients and direct them into offline interactions.

About 50% are similar to banking apps. They enhance current client communications.

The rest (20%) are marketing products. They promote online investment-focused products and services under the guise of handling family assets and capital.

Notably, we identified no scam apps in a sampled range. The lack of fraud in this area is, of course, encouraging. However, it also suggests that the industry does not attract leading actors, as scammers tend to follow them.

What is Owner.One?

Wealth transfer self-acting algorithms will work automatically, never too early, never too late, but just-in-time. It will be triggered by life events, outlined by the owner and will reach the addressee.

Wealth owners acquire a client-owned autonomous infrastructure for inventory, control, and transfer of capital and assets data. No third parties are needed. Owner.One is designed for individuals with assets worth $3M to $99M.

What are Owner.One’s key features?

Our service helps capital founders. They can easily prepare data on assets and capital for transfer. They can transfer it to family or other chosen people.

Here are the top five features, available only via Owner.One

Is Owner.One encrypted?

Owner.One is blockchain-based. It ensures no third party can access customer data, not even Owner.One.

You can learn more on our product page. It details how Owner.One helps you keep your assets and capital data transfer-ready.

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