The number of hacking incidents involving cryptocurrency exchanges until now shows that the security features implemented by many platforms aren’t enough and are in need of an overhaul. If it is indeed true, then the recent initiative of the Cryptocurrency Certification Consortium is a welcome development for many community members.
The consortium has recently introduced a security guidance — Cryptocurrency Security Standard, suggesting the implementation of best security practices by Bitcoin and other crypto-exchange platforms across the world. The guidance draft is designed to introduce new security features while augmenting the existing standards adopted by many exchanges and trading platforms. Some of the features presented by the Cryptocurrency Certification Consortium includes advanced authentication procedures, multiple signature techniques, and decentralized storage methods.
The proposed Cryptocurrency Security Standard will be a one-size-fits-all solution that can be followed by any digital currency platform to secure user funds irrespective of the business nature. Many cryptocurrency platforms have already adopted multi-factor authentication systems for additional security, and few make it compulsory for the users to enable 2FA to operate their accounts.
Also, the multi-signature feature, which requires two or more users/devices to confirm transactions is offered by many wallet service providers. While multi-signature wallets are prevalent, it is yet to be implemented by a majority of Bitcoin exchanges and trade platforms. The draft also suggests wallets on cryptocurrency platforms to be encrypted and frequently backed up to ensure that the access to cryptocurrency deposits is not lost in the case of hardware or software failure.
Since the hacking incidents, cryptocurrency platforms are increasingly using cold storage/wallets to store a majority of the user funds, while maintaining a minimum required liquidity in hot wallets. The adoption of such practices has limited the risk of exposure to external attacks, cutting down losses in the event of hacking incidents.
The security standard also makes allowance for certain procedures to be invoked in the instance where the keys are compromised or lost. The consortium has also given consideration to policies for access control involving cryptographic keys. These policies are put in place to help organizations in the eventuality of the security compromised by either an insider or a hacker who might have gained access to the keys.
A combination of security features, contingencies and regular security audits makes the new Cryptocurrency Security Standard useful for crypto-platforms. The wider adoption of these security practices will help exchange platforms, both big and small to operate without compromising the safety of both users’ and platform’s cryptocurrency deposits.
Ref: Cryptocurrency Certification Consortium | Clapway | Image: Shutterstock