Definition ∞ Centralized Key Risk represents the danger associated with a single entity or small group controlling cryptographic keys essential for securing digital assets or protocol operations. This concentration of control creates a single point of failure, making the system vulnerable to compromise if those keys are lost, stolen, or misused. Such a risk directly opposes the decentralization ethos of many blockchain systems.
Context ∞ The topic of Centralized Key Risk is a frequent subject in cryptocurrency news, particularly when discussing security incidents involving exchanges, custodians, or protocols with administrative control. Debates often focus on the trade-offs between convenience and security, driving efforts toward multi-signature schemes, hardware security modules, and progressive decentralization to mitigate this vulnerability.
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