Security is one of the main concerns that torment traders and holders who operate with digital assets. They have reason enough to worry: between 2019 and 2020, cyberattacks claimed nearly $6.5 billion. That is the estimate of CipherTrace, whose short-term forecast is not very encouraging.
The study by the Californian Company puts on the table once again the fundamental problem faced by the main players in the crypto market: developing truly effective cryptosecurity technologies. It is true that physical wallets offer high levels of security for users, considered individually, but your funds are fully exposed when trading.
Holders have numerous techniques at their disposal to protect their cryptos, from paper wallets to cold storage devices. The risk for traders is that exchanges do not store digital assets securely. In most cases (if not always), they resort to hot storage and use a single deposit address for all clients.
This assumes that, for example, the XRP traders of an exchange share the same address, with the addition that all the capital is exposed. If we talk about crypto exchange platforms, it is easy for hackers to commit massive thefts. This is valid for leading exchanges like Binance or powerful networks like the PolyNetwork (which has staged the biggest theft in DeFi history this year).
Is current cryptosecurity technology effective?
That hacking, theft and fraud follow a trend that is directly proportional to the technological advancement of the crypto space raises many doubts. One of the most discussed questions is whether current cryptosecurity technology is up to the innovations that allow cybercriminals to continue committing their crimes.
If we talk about retailers, physical security mechanisms are acceptable and, by following some minimum digital security guidelines, they can protect their cryptos without too many headaches. The real challenge is facing institutional investors and exchanges; ignoring the whales, although some handle amounts of crypto worth mentioning.
It is enough to get an idea of the volume of digital assets managed by companies such as Bloomberg or exchanges of the likes of Kraken. In these cases, the effective combination of physical and digital security measures is not so easy to achieve. But they need to find solutions. We are talking about cryptocurrency funds worth billions of dollars: an impossible target for hackers to ignore.
Is full cryptosecurity possible on exchanges?
In the case of exchanges, one of the weak points to highlight is hot storage. Keeping the funds available for users to carry out their trading operations is a necessity, but it is also a circumstance that hackers take advantage of to carry out their attacks. The ideal solution would be to implement offline exchange mechanisms, keeping the funds protected thanks to cold storage.
This combination of physical and digital security measures is possible, but it entails a cost in personnel and infrastructure that most platforms and companies are not willing to assume. Many simply cannot or are not as involved in the sector (as is the case with some institutional investors). Of course, you can always outsource security issues.
Through extensive BSC smart contract audits, Cyphershield aims to guarantee security to the chain and its users. It also sets high security requirements for the new initiative to adhere to.
