Chain of custody refers to the process of maintaining and documenting the ownership and transfer of cryptocurrency assets. This concept ensures that the origin and movement of digital assets are transparent and verifiable. When a cryptocurrency is created or acquired, it has a unique transaction history that tracks its flow from one address to another. Each transaction is recorded on a public ledger, which provides visibility into the chain of custody. This transparency helps prevent fraud and ensures that owners are aware of the asset’s history.In practical terms, chain of custody is crucial for establishing provenance. For example, if a digital asset is used in legal proceedings or transferred between parties, knowing its history can confirm its legitimacy. Overall, a clear chain of custody fosters trust among users and can enhance the security of financial transactions involving cryptocurrencies. By documenting ownership and transfers, parties can confidently engage in transactions knowing the asset’s background.