It looks like it is possible that cryptocurrency issuers may turn to the old-fashioned way of security – bank vaults.
After hackers stole $30 million worth of ether last week, a company which is planning to raise money with cryptoassets is suggesting another security solution which is a bit quaint, namely vaults. The company emphasizes on how hard it is to keep anything secure in the online space nowadays mostly due to the highly advanced new technologies.
BitBounce is an anti-spam email provider which is planning to raise $20 million by initial coin offering of digital tokens on the ethereum network. The founder Stewart Dennis says that he may have millions of dollars worth of tokens left from the ICO which need to be kept safe and secure. Due to recent breaches and heists which proved that storing digital money online hides huge risks, Dennis said that he is considering offline solutions like theft insurance, safe deposit boxes and banks vaults.
How does a crypto heist work? Bitcoins and ether online holdings can be accessed only with the usage of a private key. The key is basically the password to a digital currency wallet. However, the problem is securing that key. We all know how advanced technologies have become and how hackers take advantage of that. If crooks manage to steal this password, they can access the digital wallet.
One of the options to increase the security of such wallets is if the key is kept in “cold storage”. This means that the password is kept offline where hackers cannot use their advanced skills to steal it. The passwords can be stored on a flash drive and lock in a safe or it can be written on the piece of paper.
One of the companies providing this kind of services (but for Bitcoin only) is Xapo. Xapo is known as the world’s most secure Bitcoin wallet and it has been since 2014. The assets of the investors are stored in vaults in a decommissioned Swiss military bunker in the Alps. According to Xapo`s official website, the offline servers are “guarded by intense human and automated security measures”. However, better security impedes fast accessibility but the company says it takes 48 hours to move bitcoins from its offline vaults to the customer`s online digital wallet. It seems like old-school security methods like security guards and steel doors are still needed after all.