Carbon Black estimates that more than $1 billion in cryptocurrency was stolen in the first half of 2018 alone. And though cryptocurrency custodians must wrestle with some of the same security risks as traditional financial markets do, the crypto environment presents some unique challenges.
The digital environment needs fortification, of course, via a secure network, encryption technologies, and other anti-hacking defenses. But the other, not so obvious, risk area is protecting the cryptocurrency assets held in cold storage. With cold storage, private crypto keys are physically stored offline or on a computer that is isolated from the network. In many ways, it’s considered a safer alternative to hot storage, in which private keys are stored online.
To protect these small, but highly valuable assets, custodians must identify and mitigate the risk exposure associated with storage and transportation of the private keys. Those risks include the size of the devices, identity management, access control, physical and operational risks, and the potential for violence.
In the infographic that follows, we explore each of these risks in more detail and highlight why cryptocurrency fraud prevention requires special consideration.
