The recent cyberattacks on crypto exchanges and the New Zealand stock exchange throws a spotlight on emerging security threats and the importance of robust cybersecurity. These attacks serve as a timely reminder of the importance of cybersecurity for the entire crypto industry.
Safety and security should always be a top priority for crypto exchanges. There should be proactive implementation of systems and checks that ensure that customers can trade in a safe and secure manner.
Crypto exchanges should retain full control of custody of assets held on their platforms. This can be achieved by deploying a robust cold wallet solution. At Bitfinex, we no longer use third-party custody services for the management and custody of our customer’s digital tokens. Currently, approximately 99.5% of our customers’ funds are maintained in an offline, multi-signature cold wallet, which is not accessible from our platform or its servers.
Crypto exchanges need to ensure that their server networks are protected with state-of-the-art security measures. Our expanded security team continues to audit protocol implementation at every level on our platform to maintain an inherently hostile environment toward intrusion, further employing routine external security audits. Exchanges should also perform routine penetration testing to preserve the integrity of their systems under endless attack scenarios.
While crypto exchanges can maintain the above platform security measures, it is equally important to empower users to increase their own personal security – be it via education and raising awareness of the latest cyber threats, or through security measures on platforms. From account authentication via Two-Factor Authentication (2FA) or Universal 2nd Factor (U2F), to more advanced features such as API key permissions and verification tools, we provide our customers with a strong portfolio of user-determined security measures.
The state of security in the crypto industry
We have been observing an increasing trend of hackers successfully penetrating the security of well-known entities in the digital asset space and wider technology sphere. We are never complacent when it comes to security. The hack against our exchange in 2016 resulted in 2,072 unauthorised transactions broadcast on the Bitcoin network, involving 119,755 bitcoins in aggregate. This was a dark chapter in our exchange’s history and we have been vocal about the need for a coordinated effort across the digital asset space to help prevent these types of crimes from taking place. This should increase consumer confidence in digital assets and help pave the way for mass adoption.
As mentioned earlier, we believe in educating and building awareness around the latest cyber threats to our industry. Users can then be more discerning and avoid being the next victim of such attacks. Having more users who can detect and report such threats can also help keep the wider community safe.
The success of Bitcoin and the wider crypto industry has been built on an inherent anti-fragility that is resistant to hackers and fraud. As an exchange at the forefront of implementing robust security measures to protect our customers, Bitfinex is proud of the technological innovation in the industry to keep crypto safe. A proactive approach using new technologies to protect customers’ funds is characteristic of an industry that has been built on high ideals for empowering individuals to take control of their finances.
Image source: Shutterstock