February 24 marked the fifth anniversary of the now infamous Mt. Gox exchange hack. Five years later, we are reminded that keeping crypto secure is still a major issue. Especially as the industry matures and continues to be embraced by mainstream financial institutions.
Mt. Gox saw 850,000 bitcoins vanish, an amount valued at more than $450 million at the time. As troubling as that number is, a scarier statistic is that to date there has been billions stolen from various exchanges across the globe. Last year alone there was $850 million stolen from exchanges, including one incident where over half a billion dollars worth of crypto was stolen from an exchange. These hacks have occurred so often that the stories have now become commonplace in crypto news.
Five years later, there are some important lessons to learn from the Mt. Gox incident:
Enterprise-Level Security: If crypto is going to become mainstream faster, security needs to be addressed at the enterprise level. The level of security that hardware wallets have provided for individual investors needs to be scaled for the enterprise. These solutions must be adopted by exchanges to provide investors with peace of mind that their assets are secure.
Balance Speed and Accessibility with Safety: While protecting an investor’s assets is paramount, the need to provide safety and security must be balanced with speed and accessibility. For example, the safest place for your gold is to bury it in a safe, but then an investor sacrifices accessibility in order to keep the asset secure. Companies must work on solutions to deliver both — providing confidence that a customer’s asset is protected, but at the same time can access it if needed — providing flexibility without compromising security.
More talk about Security Solutions, less about Volatility: While there is no shortage of attention around both hacks and the volatility of crypto, there is much less attention to the enterprise-level security solutions on the market. Exchange hacks can’t be accepted as normal. And while there will continue to be a focus on the volatility of digital assets, there needs to be an increased focus on security solutions and all of the great technology being developed to prevent the next major enterprise-level hack.
Where the Market goes from here: Securing Critical Digital Assets
Mt. Gox might have been about Bitcoin and the need to protect digital assets, but it represents a larger issue as more devices are moved online. With more things being connected to the internet, there are more endpoints to penetrate — making homes, organizations and businesses more susceptible to large scale attacks. At Ledger we believe in protecting your entire digital ecosystem and securing all endpoints, from individual investments, to enterprise-level custody solutions, to all IoT-connected critical digital assets, as the need to build up digital resilience becomes even more important. Protecting critical digital assets — ranging from home security systems, to medical devices, to Bitcoin, will become increasingly more difficult. And the need for a digital security ecosystem will become greater than ever before.
Demetrios Skalkotos is the Global Head of Ledger Vault.