A recent spate of hacking incidents affecting cryptocurrency exchanges has alarmed the industry. Security breaches on intermediary cross-chain bridges and hot online wallets have also raised concerns calling upon professionals to improve digital security for themselves and their clients.
According to Alex Zinder, global head for hardware wallet maker Ledger Enterprises, exchanges, in particular, should consider the placement of more reliable security measures. Zinder cited how the rapid growth of the cryptocurrency ecosystem made it more susceptible to hacking and exploitation.
Indeed, several safety incidents involving cryptos have been difficult to manage and resolve. He added that as companies add tools and services that make the ecosystem more complex, it increases the number of intermediaries and players involved in the process, thus increasing the possibility of a security breach.
Zinder released the statement following an incident last August 2nd wherein over 8,000 hot wallets in the Solana blockchain were collectively drained of around $5 million worth of tokens by hackers preying on a vulnerability in the system. The exploit led to reiterated calls in the crypto industry to make security a top priority – something which may impact the industry’s longevity and survival over time.
Zinder, however, quickly pointed out that the blockchains themselves are not the issue. Rather, intermediaries and wallet providers should be closely scrutinized to ensure the security of users.
What About NFTs?
Another area that requires heightened security is the growing non-fungible token (NFT) sector. Global corporations or conglomerates that have begun to use NFTs to increase awareness of their brands need to rethink their online security strategies to protect the integrity of these digital assets.
Should a company compromise the security of its digital assets or related governance, they are essentially putting its brands, audiences, and core communities at risk.
A Different Way of Doing Things
Hot wallets have always been, in practice, connected to the internet. But companies like Zinger’s provide what are known as cold wallets – external crypto storage solutions that store key information not online but on external devices like flash drives.
For his part, Zinder feels that this is just one possible solution. In the long run, however, the growth of the crypto sector depends on strategic partnerships between exchanges like Coinbase and hardware wallet providers, which allow for heightened security.
Zinder’s Ledger Enterprises recently raised $380 million in a Series C funding round last year. Today, the French wallet maker is now valued at $1.5 billion and has sold over five million crypto hardware wallets, essentially holding 15% of the total number of crypto asset holdings worldwide.