Traditional cryptocurrency administrators increase security to meet institutional requirements

Institutional investors pay particular attention to digital assetsas the price of Bitcoin (BTC) continues to rise to unprecedented levels, nearing $ 24,000 for the first time in its history.

The latest results from a survey conducted by Bank of America-Merrill Lynch December 4-10 show this About 15% of fund managers, with $ 534 billion in assets under management, believe bitcoin is the third largest transactionafter tech stocks and short selling of the US dollar. In addition, a recent Fidelity survey found that Almost 36% of respondents, or 774 institutional investors, own cryptocurrency assets.

However, as Bitcoin continues to attract the attention of professional investors around the world, Security measures and insurance guarantees are becoming more important than ever. This is especially the case with more traditional custodians and banks that support digital assets.

Offline security is a must to keep digital assets safe

Traditional cryptocurrency administrators increase security to meet institutional requirements
Traditional cryptocurrency administrators increase security to meet institutional requirements

A report released this year by the Big Four’s KPMG firm shows this The most important measure for cryptocurrency holders who want to build a sustainable business model is to leverage the security and resilience of the next generation.. The KPMG report indicates that this includes the integration of key cryptographic techniques, including multiple signature, sharding, and multipart computing, as well as dedicated physical hardware. In other words, Online and offline security measures are required to protect digital assets.

Lior Lamesh, CEO and co-founder of GK8 – an Israeli blockchain cybersecurity company – told Cointelegraph as much Offline security procedures for protecting digital assets are particularly important for traditional institutions with a lot of money and a reputation for administration.::

“Since blockchain is an immutable distributed ledger, businesses must do whatever it takes to prevent hacks. When it comes to online wallets, it’s easy to see why they are vulnerable: they are always connected to the internet. However, this is not the case.” It’s safe enough for banks and traditional custodians. “

For example, Lamesh said the team of former Israeli military cybersecurity personnel behind GK8 developed one Completely offline solution for traditional custodians and banks looking for protection for digital assets. This consists of an offline vault that offers the ability to create transactions on a blockchain network while working completely offline.

The offline blockchain transaction execution process eliminates all possible attacks on users’ private keys and provides complete protection against cyber threatsto Lamesh. Although unable to reveal all the details, Lamesh said that this solution is made possible through proprietary cryptography that allows the vault to create, sign and send blockchain transactions over a one-way connection without the need for digital inputs that may contain malicious code. Furthermore, GK8’s offline vault is backed by $ 500 million insurance.

Traditional attendees consider offline storage a necessity

One company that has benefited from an offline custody solution is Prosegur, a Spanish security company that acts as the administrator of the physical security of traditional banks and manages more than 360,000 million euros annually.

Last year the company was attacked by ransomware Ryuk, a trojan that encrypts files on a compromised device and usually requires payments in bitcoin to decrypt them. This particular attack is of concern for several reasons, but security has been a priority for Prosegur ever since the company launched Prosegur Crypto, a digital asset management and custody service.

Raimundo Castilla, CEO of Prosegur Crypto, told Cointelegraph so The new service from Prosegur responds to the growing demand in the market for the protection of digital assetsespecially since more and more institutions deal with cryptocurrencies.

According to Castilla, the company examined a number of different security offerings, including cloud solutions and cryptography based on hardware security modules. However, he noticed this The offline solution was different in that it poses no risk of potential external attacks because it is completely offline. “It’s definitely the safest solution we’ve come up with, and that’s exactly what we were looking for as security professionals,” he said.

However, companies like Prosegur are not the only ones choosing offline security solutions. OSL, one of the leading platforms for digital assets in Asia and a member of the BC Technology Group, In addition, offline military security protocols are used to protect the digital assets of hundreds of institutional clients and professional investors..

Wayne Trench, CEO of OSL, told Cointelegraph: “This includes pOnline and offline security protocols for military purposes, strict anti-money laundering and knowledge of your customer requirements, market surveillance and segregation of customer assets“.

Trench added that OSL has a number of strict integrated procedures and comprehensive insurance against online and offline wallet crimes. Security measures are mandatory for OSL, which recently became one of the first public companies to be licensed by the Hong Kong Securities and Futures Commission to partner with regulated automated digital asset trading and brokerage services.

Is offline protection sufficient?

While offline security practices are required to protect billions of dollars in digital assets from cyber threats, There are some challenges that are worth acknowledging.

For exampleOffline storage systems are inherently less fluid than online solutions. While some investors may not see this as a deal breaker, KPMG’s “Institutionalizing Crypto Assets” report notes that digital assets typically use public key infrastructure (PKI). However, PKI has raised disaster recovery issues in the past. The KPMG report says this These problems are exacerbated in crypto operations that depend on the availability of public and private keys for the transfer of assets.

The report goes on to say Organizations that manage key pairs need to develop disaster recovery plans to secure private keys in every tier of storage for every type of digital asset. However, traditional techniques, such as using a hardware security module like the one mentioned above, can fall short due to their physical dependency. The report says:

“A [módulo de seguridad de hardware] Destroyed or unavailable can mean lost or unavailable crypto assets. Other traditional fail-safe techniques such as high availability also impair security or are simply not technically possible for an offline wallet. “

Despite the worries Traditional custodians and banks understand that security is the most important feature when supporting digital assets. This was challenging, however, as Castilla realized that the custody market tended to offer off-the-shelf cybersecurity solutions that were not always invulnerable to the risk of loss due to improper physical access.

Therefore, Castilla stated that in the future Solutions should not only transparently represent the physical protection of assets and access to systems, but also the cybersecurity of the area in which asset management takes place: “This is the way to manage secure transactions for blockchain-based assets as it is one aspect of the tremendous vulnerability that institutional investors must consider in their custody decision.”

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