The crypto market has seen countless hacks and exploits over the year. This has directly impacted the mainstream adoption rate. Ergo, technological innovation is a must to protect client assets and help exchanges and companies stay one step ahead of hackers.
Numerous security challenges, including thefts, hacks, and fraudulent activity, have accompanied the rise of cryptocurrencies and blockchain technology. These events have tarnished the industry’s reputation and hampered mainstream adoption.
Investigation of various vulnerabilities
Hackers participating in crypto-related illegal activities are increasing. The focus is once again on the vulnerabilities of crypto exchanges and the assets they trade. FTX’s $400 million hack last November was a key factor in its downfall, which the industry is still reeling from. Hot wallets are particularly vulnerable, and Bitcoin ATM makers have suffered massive reputational damage from recent exploits.
Overall, the crypto industry faces numerous security challenges. Some of the biggest security obstacles faced by the crypto industry are:
- Chop: One of the biggest security challenges facing the crypto industry is hacking. Cryptocurrencies are stored in digital wallets; If they are not properly secured, they can be hacked and the funds stolen.
- phishing scam: Another significant security challenge for the crypto industry is phishing scams. Cyber criminals often use phishing emails and websites to trick people into giving them access to their cryptocurrency wallets.
- Insider Threats: Insider threats can also pose a significant security challenge for the crypto industry. Employees with access to sensitive information or cryptocurrency wallets may abuse their privileges or disclose information to outside parties.
- malware: Malware such as viruses, trojans and ransomware can also pose a significant threat to the security of the crypto industry. Malware can be used to steal private keys or other sensitive information from digital wallets.
- Regulatory Challenges: The crypto industry also faces regulatory challenges, particularly in relation to issues such as money laundering, terrorist financing and tax evasion. These challenges can impact the security of the industry by making it difficult to implement adequate security measures.
The security challenges faced by the crypto industry are complex and varied. Addressing them therefore requires a comprehensive approach that includes technological solutions to start the journey.
Looking for answers to increase credibility
Several technological innovations can help protect client assets and enable exchanges and corporations to stay one step ahead of hackers. BeInCrypto reached out to various industry experts and identified the areas where the need for better security is most pressing.
One of the most promising innovations is multi-party bill (MPC) technology. MPC allows multiple parties to compute a function together without sharing their private inputs. In the blockchain and crypto context, MPC protects private keys required to access a user’s funds. By splitting the key into multiple parts and distributing them to different parties, MPC can prevent a single point of failure and increase security.
BeInCrypto contacted Halborn, a blockchain cybersecurity company, on the matter. When asked about MPC’s key features and benefits, the team responded:
“If a user’s private key is lost or stolen, funds stored in the wallet could be stolen or remain inaccessible forever. MPC wallets try to solve the problems of traditional cryptocurrency wallets by redundantly distributing ownership of a private key among n parties.”
Another innovation that can protect client assets is threshold signatures (TSS). Like MPC, threshold signatures split a private key into multiple parts and distribute them to different parties. However, in this case, the essential parts are used to create a signature instead of accessing funds.
By requiring a threshold number of signatures to complete a transaction, threshold signatures can prevent unauthorized access and enable secure transactions.
Other key areas to consider
We continue with another technology that can increase security Homomorphic Encryption. Homomorphic encryption allows calculations to be performed on encrypted data without decrypting it. In the context of blockchain and crypto, homomorphic encryption can protect sensitive data such as transaction details and user identities. By encrypting this data, homomorphic encryption can prevent unauthorized access and enable secure storage and transmission.
Ravital Solomon, co-founder and CEO of suncream, sees full homomorphic encryption (FHE) as even more promising in its potential to boost blockchain privacy. Solomon explained that the technology allows individuals to perform calculations on encrypted data without decrypting it.
Zero-knowledge proofs also improve security in the crypto industry. Zero-knowledge proofs allow one party to prove to another party that they know a secret without revealing it. In blockchain and crypto, zero-knowledge proofs can be used to verify transactions without revealing the identities of the parties or the details of the transaction. This can enable secure and private transactions while preserving the transparency and immutability of the blockchain.
Finally, decentralized identity (DID) solutions matter in the crypto industry. DID solutions allow users to control their identities and personal data without having to rely on central authorities or intermediaries. By using decentralized identifiers and verifiable credentials, DID solutions can prevent identity theft, improve privacy, and enable secure access to digital services.
Technological progress is a must
Technological innovation is critical to protecting client assets and helping exchanges and firms stay ahead of hackers. The crypto industry faces numerous security challenges. Still, several technological innovations can protect customers’ assets and allow businesses and firms to stay one step ahead of hackers.
These innovations include multi-party computations, threshold signatures, homomorphic encryption, zero-knowledge proofs, and decentralized identity solutions. By adopting these technologies and investing in security, the crypto industry can increase trust, foster mainstream adoption, and unlock the full potential of blockchain and crypto.
Disclaimer
Following the Trust Project guidelines, this special article presents opinions and perspectives from industry experts or individuals. BeInCrypto is dedicated to transparent reporting, but the views expressed in this article do not necessarily reflect those of BeInCrypto or its employees. Readers should independently verify information and consult a professional before making any decisions based on such content.
