Digital assets are entering a new engagement phase. President Biden’s executive order on cryptocurrencies has marked the beginning of a new age for the technology, with a clear indication that digital assets will stay and play an important part in building new financial infrastructure.
This method is not unique to the United States. Other major financial and economic centers are hastening the development of their regulatory frameworks on this subject. European legislators have decided against adding a burdensome amendment to the Markets in Crypto Assets (MiCA) bill on proof-of-work-based assets, demonstrating their commitment to establishing a system that balances risk management and true financial innovation.
Many of the world’s top financial firms are well on their way to developing digital asset use cases. This regulation paves the way for them to enter crucial worldwide markets with regulated products and services.
The global cybersecurity market size in 2021 was $216.10 billion and is predicted to increase to $478.68 billion by 2030, representing a CAGR of 9.5% during 2021-2030.
Digital Asset Security
Security should be the topmost priority for any organization, regardless of application. In 2021, crypto currency theft increased with $14 billion in crypto currencies stolen, a 79% rise over the previous year. Despite such hazards, many businesses lack clear security criteria for use cases, with a variety of products and services claiming to be the gold standard.
Although it can be difficult to keep up with the most recent advancements in digital asset security due to the sector’s fast-paced innovation, this is the ideal time for the industry to unite and establish a taxonomy for uniform security standards.
Setting The Standards
Every application involving digital assets must prioritize security. Security is about protecting the private keys needed to access and control the assets in digital wallets. Hardware security modules (HSM) and multiparty computation (MPC) are the two main methods for wallet security for institutions.
A physical computer designed with the specific goal of protecting keys and handling cryptographic transactions is known as an HSM. HSMs are accredited to international standards and are the most widely accepted by the Federal Information Processing Standards (FIPS) 140. The high FIPS 140 security certification level available is security degree 4, providing the most strict physical security and robustness against environmental threats.
Multiparty Computation (MPC) operates based on the distributed model of trust, spreading keys over numerous entities and utilizing zero-knowledge computing to permit the entities to share data without disclosing it. MPC and HSM can be network-connected (hot storage) or used offline (cold storage), which is less flexible but more secure.
Furthermore, combining aspects of both solutions (cold HSM, hot MPC, etc.) can enable the switching of signature techniques based on the required requirements and application, allowing businesses to maximize security and agility.
Eliminating Single Points Of Compromise
To protect highly confidential keys from internal and external threats, adequate security mechanisms must be in place. Keep your key (KYOK) technology should be adopted as an industry standard to ensure that client firms retain sole access to their crypto keys. The adoption of trust less computing technology ensures that no special access privileges are granted to outside technology providers by limiting access to encryption keys to authorized individuals from client companies.
This system ensures that keys are only accessible to clients. When combined with a robust end-to-end authorization policy architecture that needs signature sign-offs from multiple internal users for any application, No data is ever disclosed to any machine or person on the network, ensuring no single point of compromise.
Stringent Risk Management Environment Of Metaverse
Investors have reportedly lost $3.9 billion worth of Bitcoin due to poorly handled keys. In the event of a crisis, businesses should have complete recovery solutions for vital private key recovery backups.
The base of this technique should be the generation of several FIPS 140-2 Level 3 smart cards carrying protected key shards of recovery seeds. If these smart cards are physically stored in safe and distributed environments, there will not be any point of failure in the recovery storage.
Insurance also has a significant impact. Gold-standard security protocols ensure that assets are easily insurable, easing the burden of worrying about protection.
A digital environment that mixes virtual and augmented reality is known as the metaverse. Some of the cyber security threats posed by current technology are comparable to those posed by internet use. Because of its architecture, the metaverse is expected to offer new cyber attacks in addition to traditional phishing, malware, and hacking. Crypto currency and non-fungible tokens (NFTS) are widely used in the metaverse and may influence hackers.
Future Trends
The market for digital assets is an innovative and creative sector. The difficulty of future-proofing use cases for businesses interacting with digital assets has arisen. Due to the lack of other options, the choices have been limited to a binary tradeoffs between security and agility. Now that infrastructure is more developed, businesses should use a defined taxonomy of security infrastructure regardless of their use case. But more crucially, companies can now move past the MVP use cases of today and look ahead with the assurance that they will be able to adapt and scale to their client’s and their business demands with agility and flexibility, no matter what the future holds.
The digital asset business is a highly innovative and creative industry. There have been difficulties for organizations working with digital assets in terms of future-proofing use cases. Due to the scarcity of alternatives, the only options available were security and agility as a binary tradeoffs. With the introduction of mature infrastructure, enterprises should use a defined taxonomy of security infrastructure regardless of their use case. But, more importantly, businesses can now be sure that, whatever the future will hold, they will be able to scale and adapt to their business and client demands with agility and flexibility, regardless of the MVP use cases.
The providers’ top priority should be to lead the market toward a uniform, no-compromise security standard supported by a flexible and adaptable infrastructure. By doing this, companies can ensure that they have the necessary infrastructure to function quickly, clearly, and securely in the area as the usage of digital assets increases.
