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October 16, 2018

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Fintech Security Playing Catch Up

November 9, 2018

 

One of the most commonly cited problems with cryptocurrencies is their security. This problem has become a major issue over the past decade with traditional fiat systems as well, where many global companies have been hacked. Hackers are able to steal users personal information directly, because credit card information is not always stored cryptographically.

 

This process is inherent to most traditional, public, peer-to-peer cryptocurrencies. However, where cryptocurrencies are placed into a more traditional setting via financial investment products like ETFs and many popular Bitcoin futures, a central holding location is created. This defeats the major benefit of decentralization for cryptocurrencies, but is allowing the general public to become aware of their existence. Most popular cryptocurrency exchanges are centralized, with users’ cryptocurrencies held by the exchange itself. Two cybersecurity firms have just released a ranking of the top exchanges and their security measures.

 

Ranking Exchanges

 

Group-IB a Moscow, Germany based company partnered with the crypto asset insurance platform CryptoIns to grade the security of U.S.-based exchanges. Their focus was custody processes:

 

“In the first place, we assess how crypto exchanges deal with crypto and fiat assets: what are the exchanges assets keys’ storage and management procedures” - Group-IB

 

The research concluded that Kraken stood alone as by far the safest crypto exchange. Following Kraken was Bittrex and Coinbase Pro for the next highest level of security. At the very bottom of the reports ranking was Yobit. Somewhat risky exchanges included:

  • Binance

  • Bitfinex

  • Bithumb

  • Bitmex

  • LocalBitcoins

  • MyEtherWallet

  • Poloniex

It’s interesting to note that LocalBitcoins does not perform custody services like the other exchanges in this list. The services allows users to exchange directly peer-to-peer for fiat to Bitcoin transactions. In this way, any problems or losses would occur because of user-error, and never because of failure on the developer end.

 

CryptoIns Insurance

 

The digital asset insurance firm is supported by Swiss insurance broker ASPIS S. The company works at the institutional level, rather than offering insurance to retail investors. The new insurance policy covers losses from “cyber-attacks on exchange software, theft, fraud and illegal actions of crypto exchange personnel.”

 

 

By: BGN Editorial Staff

 

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