Tokyo-based Coincheck is under scrutiny after hackers stole $530 million worth of digital money from its exchanges, making it one of the biggest cyber heists on record. Following this incident, Japan’s Financial Services Agency is taking astringent actions to inspect all cryptocurrency exchanges. While Coincheck promised to reimburse customers for 80% of the stolen virtual tokens, the incident highlights the challenge of regulating a virtual asset that is traded globally.
Rick McElroy, Security Strategist at Carbon Black (bio and headshot attached), shares his insights on how organizations should be prudent when tapping on opportunities in cryptocurrency –
“As with any currency, people should take precautions when protecting and using cryptocurrency. The history of exchanges and hosting sites absconding with cryptocurrency combined with the number of ‘new consumers’ jumping in to the market presents a huge target for cyber criminals. If you think of cryptocurrency as a commodity, such as gold, you wouldn’t just leave it in the hands of a fly-by-night vendor, but rather one that has strong physical security controls over it. You would probably put it in a safety deposit box inside a secure bank or something similar, that is insured against theft. In the real world, you would ensure that the investment in that commodity was protected (commensurate with the value of the commodity). The same holds true for the cyber world – this level of protection for cryptocurrency doesn’t exist unless you invest your time in implementing a proper cybersecurity strategy.
Most people often have the misconception that cryptocurrency can be dealt with like any other piece of electronic data. However, the difference is that theft of digital files such as photos from a cloud storage provider does not have the same financial implications as a cryptocurrency hack. At worst, losing photos is an inconvenience and embarrassment but in the case of crypto currency, a loss could financially eliminate you or your organization (depending on what you provide for the crypto market).
The golden rule is: When it comes to cryptocurrencies, trust no one. Leaving your cryptocurrency in a hot wallet that is online and connected to the internet, increases your vulnerabilities and almost ensures a loss when hacked. People can protect themselves better with a cold wallet, such as storing cryptocurrency in a USB stick, with at least one backup. After all, this is money. The power is in the hands of consumers to take the necessary steps to protect individual currencies.”