Eric Larcheveque is the CEO of Ledger, a leader in the field of security and infrastructural solutions for cryptocurrencies and blockchain applications since 2014.
The following is an exclusive contribution for the 2018 year of CoinDesk under consideration.
2018 was a record year.
From the number of hackers in the exchange of cryptocurrencies, to the amount of resources that have been stolen, to the greatest exchange attack of all time, cryptography has set many records. Too bad they are not the kind of record that the crypto-innovators pride themselves for next year.
Although the cryptocurrency continues to become more widespread, this demonstrates the awareness of how dangerous it is to keep your cryptocro exchange does not seem to be in step with the times.
It has been very volatile for 12 months for cryptocurrency markets and as the value has increased at the beginning of the year, the number of new investors has also increased. With these new investors, the interest of hackers has increased and as markets have grown so rapidly, exchanges have not had the time or resources to build resilient security solutions.
Key lessons for 2019
- Exchanges suffer from systemic risk – Having to secure billions of dollars in storage, they are a magnet for hackers. It is much less risky and much more profitable to hack an exchange than a bank vault. Exchanges are usually the first fintech and not the information security companies. They have shown in the past that their culture of safety and awareness were not always at the height of the level of resources they had to protect.
- Hackers are becoming more sophisticated – As cryptocurrency becomes more mainstream, so do its hackers. With so much value at stake, more and more hackers have dedicated their time to stealing from these exchanges. In 2018 hackers implemented attacks on the state of art, such as social engineering, where they stole identities and pretended to be other people to successfully steal the cryptographic resources of investors. To fight the smartest hackers in the world, owners of encrypted resources need the most sophisticated security technology available.
- $ 2.7 million is stolen daily from exchanges – The amount of cryptocurrency stolen in trade in 2018 has increased by 13 times compared to last year. This equates to $ 2.7 million in cryptographic assets stolen every day or $ 1,860 per minute.
- With a record number of hacks in 2018, the need for security is clearer than ever – As we look at 2019, we can expect more corporate security solutions to arrive on the market. In addition to investing more money in security, individual investors will become more aware of the need to protect their critical digital assets in 2019. With the increase in digitization, data and the safety of individuals will only increase in importance.
Solutions for today
Exchanges are prone to hacks, because they centralize the risk and have to keep a part of their private keys online to allow withdrawals in real time. In addition, investor credentials encrypted on exchanges are also a massive security threat.
If your email is compromised, you can usually kiss all the encrypted wallets you exchanged goodbye. Ensuring the security of your cryptographic resources yourself, through the use of hardware portfolios gives you the highest level of protection.
Hardware portfolios give you ownership and control of your cryptographic assets. But with great powers derive great responsibility: being one's bank is certainly not trivial and requires discipline. The use of a hardware portfolio does not make you invincible against social engineering, physical threats or human error.
Use common sense and apply the basic safety principles.
- Do not use a cryptocurrency exchange for long-term archiving.
- If you do, use two-factor authentication, preferably one that is not limited to devices connected to the Internet.
- For your hardware wallet, choose a PIN that you can remember, but it's safe and not easy to guess.
- Keep your well-protected 24 word recovery sheet and never put it on any device connected to the Internet.
- Trust only what you can see on the screen of your hardware portfolio. Check the receiving address and payment details on the device.
- Always treat the information displayed on your computer or smartphone screen carefully. Suppose the software can be compromised at any time.
Cryptographic hackers are becoming more sophisticated, but by following these rules and storing your cryptocurrency on a hardware portfolio, you will guarantee the protection of your assets.
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Bank vault through Shutterstock