Programmable Custody

Programmable Custody is a system where the rules governing access to and control of digital assets are defined and enforced by code rather than traditional custodial arrangements.

How It Differs from Traditional Custody

Traditional Custody:

• Bank or custodian holds your assets
• You request access
• Human processes approve/deny
• Manual verification and authorization

Programmable Custody:

• Smart contracts define access rules
• Code enforces permissions automatically
• Algorithmic verification
• No human intermediary needed

Key Features

• Multi-Signature Requirements: Code can require multiple keys or approvals
• Time Locks: Assets become accessible only after specific dates
• Conditional Access: Funds released when predefined conditions are met
• Threshold Authorization: Certain percentage of stakeholders must approve
• Rate Limiting: Maximum withdrawal amounts per time period

Use Cases

1. DAO Treasuries: Community-controlled funds with coded spending rules
2. Escrow Services: Automated release based on delivery confirmation
3. Inheritance Planning: Assets transfer automatically based on conditions
4. Corporate Treasury: Algorithmic controls for spending authority
5. Agent Wallets: AI systems with programmed spending limits

Technical Implementation

Typically built using:

• Smart contracts (Ethereum, etc.)
• Multi-party computation (MPC)
• Threshold signature schemes
• Hardware security modules (HSM)

Security Considerations

While removing human intermediaries reduces certain risks, it creates new ones:

• Code bugs can lock funds permanently
• Poorly designed logic can be exploited
• No "undo" button if conditions are met incorrectly

This is why audit and formal verification are critical for programmable custody systems.