Up until this point in time, numerous digital currency exchanges, wallets and individual users have been targeted by cyberattacks, thus showcasing that despite the safety and security offered by blockchain systems, security risks still exist.
In fact, a KPMG report points out that since 2017, a total of $9.8 billion in crypto has been stolen by cyberattackers. Because of this, institutional investors are still wary when it comes down to investing considerable capital into this emerging market.
The report highlights that most thefts have occured due to insufficient security protocols, alongside unprofessional code writing.
Over the last few years, the overall popularity of the cryptocurrency market has increased considerably, thus leading to numerous all-time price records. Similarly, numerous market experts believe that future mass-adoption can be stimulated through state and institutional investments, that may increase overall market trust in the digital currency market.
With this in mind, a KPMG representative for crypto asset services stated that: “Institutional investors especially will not risk owning crypto assets if their value cannot be safeguarded in the same way their cash, stocks and bonds are.”
This creates a great opportunity for custodians, which are companies that make themselves responsible with safe-guarding crypto assets on behalf of large-scale investors. The same KPMG report noted that: “As crypto-assets proliferate, custodians have a tremendous opportunity to profit — both by earning management fees for delivering straightforward custodian services, and also by offering adjacent services only possible in the emerging crypto ecosystem.”
However, this may not be the optimal solution for the crypto market as a whole. Custodian services cannot protect digital currency exchanges or users from being hacked. Thus, numerous people believe that other types of safeguards must be put into place. The securitization process of the market can be kickstarted through user security awareness efforts, meant to encourage both crypto-related companies and users to implement smarter security practices, capable of better protecting their assets.
As we migrate more and more aspects of our daily lives into the digital environment, cyber attack occurrence rates are bound to grow. The fintech system will likely be one of the main targets, thus showing the increasing importance and relevance of digital security experts. KYC/AML policies are already fairly-popular, and represent a good way of mitigating the risk of crypto usage for cybercrime and illegal activities. On the other hand, these policies do not protect against hackers attempting to steal cryptocurrency.
As the crypto market evolves, users and companies must place an active focus on improving their security, through smart and well-tested asset storage solutions.