Despite cryptocurrency becoming a popular form of currency in recent years, with numerous people using it for various financial transactions, it is susceptible to security breaches and theft. This is especially true in the case of cryptocurrency, as it is not widely regulated and relies on complex cryptographic protocols for its security.
In this article, we will discuss the various security issues faced by cryptocurrency brokers and users, and how multisig solutions can be used to enhance security.
Security Risks in Crypto
1. Private Keys
One of the major security risks faced by cryptocurrency users is the possibility of their private keys being stolen.
Private keys are a crucial part of the cryptocurrency system, as they are used to access and control the funds stored in a particular cryptocurrency wallet.
If a private key is stolen, the thief can easily access and transfer the funds stored in the wallet.
This is a major concern for cryptocurrency brokers, exchanges and users alike, as it can result in the loss of a user’s entire investment.
2. Exchange hacks
Another security risk faced by cryptocurrency users is the possibility of cryptocurrency exchanges being hacked, which can result in the loss of user funds.
For example, in 2019, the cryptocurrency exchange Binance was hacked, resulting in the loss of 7,000 Bitcoin, worth over $40 million at the time.
Cryptocurrency brokers are not exchanges and tend to store users’ funds in cold storage custody solutions.
To address these security issues, many cryptocurrency users have turned to multisig solutions.
What is multisig?
Multisig, short for "multi-signature," refers to a security mechanism in which multiple private keys are required to access and control funds stored in a cryptocurrency wallet.
This means that, in order to transfer funds from a multisig wallet, multiple parties (typically three or more) must sign off on the transaction.
Benefits of multisig
1. Reduces the risk of funds being stolen
It is harder for a single entity to steal funds because multiple parties are required to sign off on a transaction.
This makes it much more difficult for a hacker or thief to access and transfer the funds.
2. It increases transparency and accountability
All parties involved in a transaction are required to sign off on it, so more parties are made accountable.
As Cryptocurrency brokers, GlobalBlock works with a number of custodians that utilise multisig or secure multi-layer sign off processes.
In addition, GlobalBlock implements two step account verification
Along with your password, we send a code to your mobile or email to verify your account.
Lastly, GlobalBlock’s chosen custodians all have their own insurance coverage for crypto assets from theft or malicious intent.
Get started with GlobalBlock today and trade crypto with confidence