Cryptocurrency is the most exciting and unpredictable financial frontier in today’s world. The opportunities for crypto-based businesses are enormous, but so are the attendant risks.
Protecting you from these downfalls is what crypto insurance is all about. Although it will safeguard your business from cybercriminals, it will also give your customers valuable peace of mind.
Are Crypto Companies Vulnerable to Online Attacks?
In January 2018, criminals launched a massive digital attack against the Japanese crypto exchange Coincheck, stealing more than $500 million worth of currency. The theft caused CoinCheck’s value to plummet more than 20% and suspended its ability to honor withdrawals.
Similar attacks have occurred across the crypto industry over the past ten years. For example, in 2014, a Tokyo-based Bitcoin exchange lost 750,000 of its member’s coins to hackers. The incident drove the organization into bankruptcy and inflicted permanent financial harm on its members.
Outright theft is only one kind of online attack that criminals launch against crypto-based businesses. Another approach is to infect the company’s network with malware that slows down or disables its systems. Unfortunately, this leaves the business with little choice but to capitulate to the cyber criminal’s demands.
Why Do Hackers Target Crypto-based Businesses?
Crypto-based companies are one of the most frequent targets for online criminal rackets. Here’s why:
- Low risk: the decentralized nature of crypto transactions makes it difficult for law enforcement agencies to track down and prosecute hackers.
- Ease: hacking into a crypto-based business requires little or no technical skill. The malware used in these attacks is readily available on the Dark Web for as little as $1.
- Lack of legitimate opportunities: the developing world is home to millions of code-savvy people with little or no access to good-paying jobs. Many of these individuals turn to crypto crime to line their bank accounts with easy cash.
How Can Crypto Insurance Protect Blockchain Businesses and Their Customers?
Crypto insurance reimburses policyholders for the cost of covered cyber attacks up to the coverage limits. This may not stop hackers from targeting your business, but it can protect you from the financial impact of their activities.
Carrying crypto insurance is also an excellent way for your business to attract new clients since they know that their assets will be protected. Additionally, having coverage improves the public’s perception of blockchain currency, further enhancing your interests.
How Much Does Crypto Insurance Cost?
Policies are available for as little as 1% of the covered asset’s value. This means that a business with $100,000 in crypto funds might be able to obtain coverage for about $1000 a year.
Of course, the actual amount of coverage will vary depending on your company’s size, stability, and cybersecurity profile.
How Do I Choose the Right Crypto Insurance Policy for My Business?
Make sure you know what you’re buying. This includes knowing how the insurer calculates the value of stolen assets, what types of fraudulent activity are covered, and how it applies policy deductibles. You should also make sure that the company has an excellent overall reputation and a sound track record in the insurance industry.
How Can I Protect My Crypto Business from Cyber Criminals?
There are many ways for crypto-based businesses to protect themselves from cyber-attacks. These include:
- Keeping the bulk of your currency in a cold wallet creates an impenetrable barrier against online thieves since the currency is inaccessible from the Internet.
- Requiring your customers to use two-factor identification: by themselves, passwords provide only minimal protection against modern hackers. So at the very least, your customers should use the second type of identification, like a message sent from Google Authenticator.
- Temporarily blocking transactions from recently updated accounts prevents the hacker from using phony credentials to transfer the victim’s currency into a dummy account.
- Notifying customers immediately after a withdrawal is made: they can act quickly if the transaction was fraudulent.
- Implementing System and Organization Control audits (SOC) regularly: a SOC spots potential weaknesses in your security framework before hackers exploit them. A SOC also reassures customers and stakeholders that you’re serious about protecting their private information.
- Creating a fraud prevention department: this is a group of cybersecurity experts that monitor your business’s activity and take fast action against potential threats.
- Encouraging your customers to use multiple wallets will minimize any single wallet’s exposure to risk.
- Sharing keys with trusted custodians provides an additional security layer against fraud and theft.
Summing It All up
Crypto insurance is a great way to protect your business from cybercriminals. But to enjoy complete protection, you should also implement sensible cybersecurity measures like the ones described in this post. These precautions can help to ensure your long-term stability and your customer’s financial security.
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