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Cryptocurrency: wallet threats and reasons for a passwordless future
May 24, 2021
As more people hop on the crypto train, the rise in security threats and the risk for human error grows. Though available wallet solutions have come a long way, there's still a long way to go to build an adequate user experience for trading, using, and storing cryptocurrency that protects and benefits the user. This article will explore the major threats of crypto wallets and the key to securing them.
Digitally enhanced crypto wallets, such as hardware and online wallets, are a promising way to provide crypto traders a secure and digital way to get the most out of their assets. However, the primary method for access relies on passwords, which do not offer the level of security necessary for sensitive systems and confidential information.
When developing a wallet, easy adoption and security are at the top of your priority list. One should not come at the expense of the other for there is growing demand to strike a balance between the two. The current best practices for wallets built to hold cryptocurrencies tend to be either iron-clad secure, or easy to use. However, popular solutions continue to face three main threats putting trust and revenue at risk. Each can be reduced by rethinking the way wallets are accessed by their owners. They are as follows:
An increasingly common scam for crypto assets, phishing scams often use tricky emails that contain links to false login pages that look like the real deal but are controlled by the attacker. These pages and phishing emails mostly imitate legitimate companies and regular access points in order to trick people into responding with personal information, especially passwords and usernames. Phishing scams are getting more and more believable and therefore difficult to spot! This is spreading mistrust across the sphere, leading to a loss of revenue.
Most of the time, Passwords are the main target of Phishing attacks, making their removal increasingly attractive. Verizon Data Investigated 41,686 security incidents of which 61 percent were attributed to passwords. Going passwordless eliminates all security issues associated with passwords. When passwords are removed from authentication, they can’t be stolen and used by threat actors in other attacks. This eliminates the efficacy of phishing campaigns altogether.
Human error remains a challenge to the adoption of cryptocurrencies, as in many other areas. Keys are lost, compromised or forgotten. It is estimated that 25% of all Bitcoin will be lost forever. Whether an online wallet, paper wallet, or a hardware wallet, there is a usability issue inherent in protecting information.
In order to decrease the risk for human error associated with passwords, it is critical that cryptocurrency wallets provide strong passwordless authentication at scale. By enabling passwordless multi-factor authentication with biometrics and WebAuthn, easy access is provided without sacrificing secure authentication. Empowering users to easily access their crypto wallets without adding to their growing number of passwords to manage or depend on other third parties like a password managers and authenticator apps provides a fortified experience to handle valuable crypto assets.
Malware, which refers to a range of 'malicious software', is nothing new. There are many types of malware, but most variations are aimed at making money. Crypto wallets are quickly becoming as much of a target as traditional online banking has been in the past. Although malware has fun names like 'electroRat' and 'Panda', a malware-infected computing device is very unsafe and any information that is entered into that device can be considered in danger. Cyber criminals use malware to steal sensitive information such as username and passwords while the user enters it into the crypto website.
Passwordless solutions based on biometrics and inherent two-factor authentication eliminate the risk of malicious credential theft as the biometrics - unlike passwords or SMS codes - are never exposed to the website.
Passwordless authentication relies on unique authentication methods and biometric factors providing unparalleled security. Where passwords provide space for vulnerability, their removal seals the gaps from hackers, fraudsters, and other bad actors on the internet.
When considering the threats and their starting points it has become clear that the time to go passwordless is now, transitioning to reliable password alternatives for crypto wallets such as:
To ensure relevant regulatory compliance, passwordless solutions for crypto wallets have to adopt open standards like FIDO2 and WebAuthn. This adoption will not only avoid password fatigue but also deliver most frictionless omnichannel and multi-instance access, establish the desired mobility, and result in a seamless, delightful customer experience.
To approach this solution efficiently and effectively, open standards like FIDO are necessary to align all major players. Hanko is built on a certified FIDO® Server infrastructure, using proven public key cryptography techniques to provide the strongest authentication possible. Hanko's passwordless authentication enables users to leverage common devices to easily authenticate crypto wallets and exchanges in both mobile and desktop environments. The technology, built on world leading FIDO and WebAuthn open standards, makes implementation simple and secure. By using Hanko, development teams easily ensure that everything is always up-to-date and compliant with evolving standards.
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