The credibility problem of cryptocurrency - and how to solve it

Chris Pace, Technology Officer, Coincover

"Is crypto safe?" It's a question we hear all the time, right after "Isn't it a scam?" and "But I've heard about this guy ..."

Some people - those undeterred by damning headlines and well-publicized hacks - are willing to take the risk when the rewards could be so high. But for the majority who haven't yet taken the plunge, security is paramount, and with each new report it becomes clearer that this is the biggest barrier to widespread adoption. So if blockchain is to have any chance of reaching the masses, individuals and businesses alike need to be convinced that what they are doing with their money and their customers' money is secure.

Expectation vs. realityWinkWinkCrypto hacks

and thefts make big headlines. However, the biggest issue leading to crypto losses is the fact that individuals and businesses need to protect their own digital assets and the way they access them. Of course, this is one of the biggest benefits of cryptocurrencies, as it goes hand-in-hand with decentralization and full autonomy over your assets - but it's also the cause of many problems. Ultimately, the lack of a safety net is one of the main reasons why so many are hesitant to enter this world.

For customers of traditional banks and credit card companies, this is not a problem; they trust that it is the service provider's job to protect their money, passwords, and personal information. Certainly, this trust is not always justified, but in the many centuries that TradFi has been around, customers have become accustomed to expecting a certain level of security from the institutions that manage their assets. All the customer has to do is make sure they don't share their four-digit PIN or reuse their password.

However, with cryptocurrencies, there is a fundamental misunderstanding about who is responsible for the security of digital assets. People assume that exchanges and wallet providers are capable of preventing fraudulent transactions or hacks, or recovering lost private keys - but the reality is quite different. And regulators are beginning to realize the risk this lack of understanding poses to consumers.

We need to address this problem if we want to bring the power of blockchain into the mainstream. After all, writing down passwords and putting them in a desk drawer is no way to change the world's financial system.

Closing

theGap

- while maintaining what makes cryptocurrencies so greatInvestorswant

to be

sure that if they are locked out of their wallets, they can get back

in.

Businesses want to know that if a transaction appears fraudulent, it will be stopped. And regulators want to know that consumers are protected if something goes wrong.

There has been a significant increase in the number of investors and institutions interested in crypto insurance. They believe it is a panacea that they can control and that will give them peace of mind. In such a young, misunderstood field, it feels like a simple solution to a complex problem: If you're at risk of having your assets stolen or lost, take out insurance so you can recover them. And for a few, that's an option. But crypto insurance - if you can get it at all - is expensive and ultimately does nothing to prevent theft or loss in the first place.

You know the saying "prevention is better than cure"? That's what we're talking about here. You wouldn't leave your front door unlocked because you have homeowners insurance - so why would you do that with your digital assets?

Proactive prevention - and a credible remedyWe'

ve

addressed two of the main issues hindering mass adoption of cryptocurrencies: the expectation that exchanges and wallets should provide security, and the lack of awareness that there is a way to protect your cryptocurrencies or those of your customers. So what's the solution?

We say that the focus is on prevention, so that end users get the best possible security while limiting the risk to the companies that allow them to participate in the blockchain. There should be two elements to this: Theft Prevention and Disaster Recovery. Currently, Coincover is probably the only company in the industry that provides this level of security by monitoring transactions to prevent theft and offering a non-pledgeable, end-to-end encrypted vault for highly secure private key storage and recovery. In addition, their technology is insured by Lloyd's of London, so they can help investors replace avoidable losses from theft or hacking. That's the full gamut of crypto protection - allowing companies to significantly reduce their risk.

To spread cryptocurrencies around the world, industry pioneers must make a concerted and deliberate effort to ensure that security and trust are at the heart of everything they do. Pioneering crypto investors and companies may feel comfortable with the security risks posed by current practices, but the vast majority of crypto enthusiasts do not. It is time to look at the growth of cryptocurrencies from their perspective and radically improve security practices across the industry.

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Chris Pace has a 15+ year career in cybersecurity and today champions exciting new technologies that will make our digital world safer for all.