Proper custody of digital assets isn’t as easy as locking up gold or paper currency in a bank vault. Since cryptocurrencies like bitcoin and ETH exist completely digitally on a blockchain, and are by nature maintained in a decentralized environment, they present an enticing target for hackers. Further, dealing with public and private keys on such a large scale isn’t easy for institutions. Secure storage of large amounts of digital assets is complex, and institutions need safe, comprehensive and integrated storage solutions.
Industry reports have shown that some $1.7 billion in cryptocurrency was stolen last year, and over $4 billion in 2019 so far. The threat landscape faced by investors is similar to those facing security professionals in all tech spaces and will only become broader as the industry grows. From social engineering to traditional cyberattack methods like site clones, phishing and SMS hacks, to basic hardware tampering, there are many entry points in this new frontier.
Today, most custodial services providers and exchanges rely on cold storage for over 90% of assets secured on their client’s behalf. The remaining share of total assets is trusted to a hot wallet in order to cater to immediate liquidity needs. Such solutions cannot be implemented at a large scale: it is therefore time to combine easy accessibility with security.
Digital asset custody must evolve from cold storage focused solutions to incorporate stronger governance frameworks to ensure the security of the coins while in storage and in transit. Security and technology have made giant leaps in the past couple of years, and solutions like Ledger Vault allows financial institutions to protect their cryptocurrencies while ensuring the highest level of asset fluidity. This is the Ledger Vault promise: a unique combination of hardware and software allowing secure storage of critical information,