There are plenty of people - some ignorant, some with vested interests - looking for any excuse to highlight the apparent shortcomings of blockchain technology. Sometimes - too often, actually - the industry leaves them a gaping open goal.
Little does more to undermine the faith in cryptocurrency than a security scandal. Accounts are hacked, user data is mishandled, millions are stolen - it’s understandably headline-grabbing stuff and it’s massively damaging to the reputation of the crypto space.
How can we expect blockchain to be taken seriously and achieve the mass adoption we hope for when security remains such a perceived failing?
In July we had the news that Bitpoint, the exchange based in Japan, had been forced to halt trading, with $32m of users’ funds stolen.
Another day, another hack: $32 Million stolen from Japanese cryptocurrency exchange
It was by no means the first time crypto exchange users have lost their money - Binance was targeted by hackers earlier this year and QuadrigaCX collapsed after the death of its CEO meant no one was able to access the stored funds.
And you can bet the next embarrassment is just around the corner.
Back to the future
Security is one of the strongest features of blockchain technology. The vulnerabilities are, in many cases, human-error. When humans are involved, the cracks begin to appear.
One of the main reasons exchanges are vulnerable is because storing tokens is not their priority. In fact, as every crypto trader will tell you, it is never a good idea to store ones tokens on an exchange.
Exchanges make their money from listing tokens, launching Initial Exchange Offerings, liquidity provision and customers trading tokens, not storing them, so many don’t go to the lengths required to keep digital assets fully safe.
The good news is that the issue is completely solvable using a combination of cutting-edge technology and a method that’s been around for a few hundred years - good old-fashioned insurance.
The opportunity has been identified by a small number of third parties, giving companies handling crypto the chance to offer their users complete peace of mind.
One such is MetaVault based in the Isle of Man (full disclosure - they are among our partners at SolutionsHub). MetaVault is a digital asset custodian offering a storage solution insurable up to $500m and above, with London based A-rated underwriters. They already have several high-profile clients who have recognised the need for action.
Insured storage means that, in the unlikely event that tokens are stolen or lost, customers are guaranteed to get their funds back - unlike with so-called ‘self-insured’ solutions.
Vote with your wallets
Convincing exchanges too learn from history and that insurance is the way forward might be a tough sell - particularly those that are less reputable.
The shift towards improved security, better protection of user data and a general improvement of standards will come when consumers demand it, or regulators require it. It’s only a matter of time before the untrustworthy actors in the crypto space are all-but eradicated as users realise the importance of choosing a service that is safe and secure and take their money to the companies who they can be sure will look after it properly.
That will drive down the number of security scandals which, in turn, will elevate consumer confidence, strengthening the trust in the sector.
THIS ARTICLE AND ANY OPINION THEREIN DOES NOT CONSTITUTE AS INVESTMENT ADVICE OR AS A RECOMMENDATION REGARDING ANY PARTICULAR CURRENCY, SECURITY, TRADING STRATEGY OR COURSE OF ACTION. READERS ARE STRONGLY ENCOURAGED TO SPEAK TO THEIR OWN INVESTMENT ADVISOR AND IT SHOULD BE NOTED THAT CRYPTO-CURRENCY AS AN INVESTMENT CARRIES A HIGH LEVEL OF RISK. ALL DECISIONS TO INVEST IN CRYPTO-CURRENCY ARE AT THE INVESTOR’S RISK. ANY VIEWS EXPRESSED IN THIS ARTICLE WERE PREPARED BASED UPON INFORMATION AVAILABLE AT THE TIME SUCH VIEWS WERE WRITTEN. CHANGED OR ADDITIONAL INFORMATION COULD CAUSE SUCH VIEWS TO CHANGE. THIS ARTICLE HAS BEEN PREPARED FOR GENERAL GUIDANCE ON MATTERS OF INTEREST ONLY, AND DOES NOT CONSTITUTE PROFESSIONAL ADVICE. YOU SHOULD NOT ACT UPON THE INFORMATION CONTAINED IN THIS PUBLICATION WITHOUT OBTAINING SPECIFIC PROFESSIONAL ADVICE. NO REPRESENTATION OR WARRANTY (EXPRESS OR IMPLIED) IS GIVEN AS TO THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED IN THIS PUBLICATION, AND, TO THE EXTENT PERMITTED BY LAW, SOLUTIONSHUB LTD, ITS MEMBERS, EMPLOYEES AND AGENTS DO NOT ACCEPT OR ASSUME ANY LIABILITY, RESPONSIBILITY OR DUTY OF CARE FOR ANY CONSEQUENCES OF YOU OR ANYONE ELSE ACTING, OR REFRAINING TO ACT, IN RELIANCE ON THE INFORMATION CONTAINED IN THIS PUBLICATION OR FOR ANY DECISION BASED ON IT.
Recommended Content
Editors’ Picks
Ripple wipes out weekly gains, experts comment on role of Ripple stablecoin
Ripple declined to $0.52 on Thursday, erasing all gains registered earlier this week. Ripple SVP Eric van Miltenburg’s comments on the firm’s stablecoin, and how it is expected to benefit the XRP Ledger and native token XRP have raised concerns among crypto experts.
Hedera HBAR slips nearly 10% after air is cleared on mistaken link with giant BlackRock
HBAR price is down nearly 10% on Thursday, partly erasing gains inspired by the misinterpreted link with BlackRock. Despite the recent correction, Hedera’s price is up 44% in the past seven days.
The reason behind Bonk’s 105% rise and if you should buy now Premium
Bonk price has shot up 105% in the past five weeks. A retracement into $0.0000216 or the $0.0000152 to $0.0000186 imbalance would be a good buying opportunity. Patient investors can expect double-digit gains from BONK that could extend up to 70%.
Injective price weakness persists despite over 5.9 million INJ tokens burned
Injective price is trading with a bearish bias, stuck in the lower section of the market range. The bearish outlook abounds despite the network's deflationary efforts to pump the price. Coupled with broader market gloom, INJ token’s doomed days may not be over yet.
Bitcoin: BTC post-halving rally could be partially priced in Premium
Bitcoin (BTC) price briefly slipped below the $60,000 level for the last three days, attracting buyers in this area as the fourth BTC halving is due in a few hours. Is the halving priced in for Bitcoin? Or will the pioneer crypto note more gains in the coming days?