CAPTIVE INSIGHT
BANKING ON
CHANGE
If there is one thing the pundits can agree
upon about crypto currencies, it’s that
they’re risky. And where there’s risk, there’s
an opportunity for insurance against that
risk. And where there’s a need for insurance
there’s an opportunity for a captive.
One other thing upon which almost all are
agreed – is that crypto currencies, or at least
the algorithms and blockchain technology
which create them, are here to stay. In its
simplest form: a blockchain is a distributed
ledger of transactions which have occurred
in a network which securely transmits any
type of information without the control
of a central authority or intermediary. To
date all such transactions are considered
immutable and impervious to fraud. In
which case, what exactly are some of the
risks associated with issuing, owning and
storing digital currencies?
Well, these can range from privacy,reputational and financial risks to recovery
risks. Although the Bitcoin blockchain deemed unhacked as of this date, bitcoin
users and investors in other crypto
currencies need to be aware of the
vulnerabilities which predominantly exist at
the entry and exit points of the blockchain,
often referred to as on-ramps and offramps.
Also vulnerable to hackers are
the crypto currency exchanges (Bitfinex
and Coinbase have both been targeted
– Bitfinex’s exchange platform breach
caused losses to users of $72 million in
users’ Bitcoins), ICO’s and the digital wallets
frequently used to store crypto currencies.
It is recommended that crypto currencies
be held in a virtual wallet if one wishes to try
and safeguard this online asset. Wallets are
available in a range of prices with varying
abilities. Are any of them truly impregnable?
No. Hackers have on multiple occasions
exposed weaknesses in the Signaling
System 7 (SS7) which has allowed them to
breach the two-factor authentication on the
wallets in which Coinbase customers hold
assets, for example. And while cold storage
(holding the asset off-line rather
than on-line) is considered
safest, this also has
its own dangers.
Matters TANIA DAVIES
+1 704 945 6620
tdavies@atlascaptives.com
atlascaptives.com
vacy,
very
n is
n
gers.
atters are
further
/atlascaptives.com
link