Nearly $10bn worth of cryptocurrency was stolen in the past three years
Weak code and lax security make cryptocurrencies vulnerable
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The $245bn global cryptocurrency industry needs to do more to secure its digital assets if it wishes to continue to grow according to a new report fromKPMG.
Since 2017, hackers have stolen at least $9.8bn in digital assets as a result of weak security or poorly written code, the accounting firm said.
As institutional investors have adoptedcryptocurrenciessuch as Bitcoin and Ethereum, this has led to a competition for a place in their portfolios and safeguarding these digital tokens is more important than ever.
Co-author of the report and co-leader of KPMG’s cryto-asset services, Sal Ternullo explained why security is holding investors back from acquiring more cryptocurrency in a statement, saying:
“Institutional investors especially, will not take positions in cryptoassets if their value cannot be custodied and safeguarded in the same way traditional assets are.”
Securing cryptocurrency investments
Custody services for cryptocurrencies have begun to spring up and Fidelity Investments along with units from the cryptocurrency exchanges Intercontinental Exchange,Coinbaseand Gemini have begun to offer them to investors.
In the same way that cash and certain types of bonds are bearer investments where whoever holds them is the owner, so to are cryptocurrencies. However, the private keys, which are a string of characters stored in adigital walletor written down on paper, are quite easy to misplace.
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When a user loses their private key or has it stolen, the asset is gone forever and this makes key custody a major challenge for traditional financial firms that are more familiar with protecting non-digital assets. KPMG explained why custody is so important to the continued growth of the cryptocurrency market in its report, saying:
“Custody – the management of cryptographic private keys that cryptoasset owners use to execute transactions – is a critical building block for crypto insitutionalization. It is fundamental to earning customer trust in cryptoassets and allowing the market to scale. 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.”
If cryptocurrencies are to continue to be bought and traded by institutional investors, then the industry needs to ensure that it can secure them first.
ViaBloomberg
After working with the TechRadar Pro team for the last several years, Anthony is now the security and networking editor at Tom’s Guide where he covers everything from data breaches and ransomware gangs to the best way to cover your whole home or business with Wi-Fi. When not writing, you can find him tinkering with PCs and game consoles, managing cables and upgrading his smart home.
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