A concern shared by many investors on the cusp of entering the crypto space is whether cryptocurrencies and digital assets as a whole are secure. Arguably the most significant barrier in the way of broader adoption, crypto’s credibility issue remains at the forefront of potential and current investors’ concerns.
Understanding Decentralisation vs Security
Cryptocurrencies are celebrated for being decentralised, requiring no central authority or third-party authentications. However, this “free world” of monetary management puts the responsibility of keeping those funds secure in the hands of the holder rather than a governmental or third-party guarantor. As a result, each crypto holder is responsible for safeguarding their crypto assets in wallets created by the relevant networks, opening the door wide open to possible human error.
With private keys and recovery seeds, some wallets are very secure. However, more convenient options like web-based wallets or wallets hosted by exchanges offer easier access and more easy-to-use features without necessarily compromising asset security. The security of an externally managed wallet will need to be assessed according to the level of security provided by the governing platform.
Exchange-hosted wallets allow users to create strong passwords, and a function that will allow account recovery should they forget them (something that network-specific wallets do not allow).
Crypto’s Trifactor Credibility Issue
The trifactor credibility issues involve the concerns of all parties involved in the industry: investors, businesses, and regulators.
Investors want to know that their funds are safe and that should they lose their private keys, their funds can still be accessed. Businesses accepting cryptocurrencies want to be assured that should a fraudulent transaction take place, it will be detected and voided. Lastly, regulators want to ensure that consumers will be protected in the event that “things go south”.
Of late there has been a rise in businesses and investors looking for crypto insurance, illustrating that investors are trying to solve a modern problem with the traditional band-aid approach. While crypto insurance for individuals is difficult to find and will likely be expensive, this doesn’t solve the issue of funds being lost or stolen, but rather provides a reactive measure that fails to address the issue of the asset (in)security at its source.
What You Can Do To Overcome This
In light of crypto security concerns, prevention is the best remedy. Ensure that your assets are held in a secure location, and educate yourself on the many things you can do to keep these funds safe.
With a focus on prevention, businesses and investors should channel their energy into limiting risk while getting the best security possible for their enterprise wallets.
To this end, Oobit has partnered with GK8, which provides blockchain cybersecurity expertise and state-of-the-art solutions to major listed companies like Mastercard, INX, and eToro.
GK8’s proprietary infrastructure has been integrated into the Oobit platform to ensure that all stored funds are kept in a cold storage vault away from the reach of potential hackers. On top of this, all assets held on the platform are insured for up to $800 million.
In order to accelerate the rate of crypto adoption, participants in the industry need to ensure that new and potential traders understand the risks involved as well as available preventative measures that they can take to secure their funds.
Pioneers and service providers in the industry should ensure that all practices are transparent and for the greater good of the users. While regulators should work together to build legal frameworks that nurture the innovation of the industry while ensuring good practices.
More robust security measures for the safe storage of digital assets are a critical aspect of improving market sentiment around the long-term viability of crypto investing, as well as promoting wider crypto adoption on a global scale.
Oobit Technologies Pte, 50 Raffles Place #37-00 Singapore Land Tower, Singapore (048623). is a company registered in Singapore (no:201716443G), that has been approved as Appointed Representative of Oobit Technologies OÜ, Harju maakond, Tallinn, Lasnamäe linnaosa, Väike-Paala tn 2, 11415, (no: 14852617 ). Which is authorized and regulated by the FIU (no: FVR001421 and FRK001304).