Saturday, October 1, 2022

7 Best Practices for Protecting Your Cryptocurrency Assets

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Everyone wants to join the crypto party but there are several risks involved which can spoil the party. The sector is new and there are no one-size-fit-all kind of measures but sticking to time tested ways of doing business can help avoid the risks.

Have a look at some of them –

1. Multiple custodians of private key

Ensure that there are more than one custodian of the alphanumeric code that serves as the key to access a crypto wallet. It is also important that the company has appropriate firewalls between custody, trading, liquidity services, or who commingles corporate assets with client funds.

Once your crypto is gone there are remote chances of recovering it.

2. Spread wealth across multiple digital wallets

Minimise your risks by spreading your investments across multiple digital wallets. It at all a hack or breach happens, the culprits won’t be able to access to everything. It is one of the most effective  ways to reduce the severity of that loss.

3. Implement time-tested procedures

Go for the basic risk-management procedures. Do not initiate anything without putting in adequate checks and balances specially when it comes to withdrawal of money.

4. Due diligence on security

Acquire a good understanding of the security environment of your digital assets and build security which includes colocation data center(s) security, vaults, and geographic segregation of critical infrastructure.

You should also invest in security software, multi-signature wallets, network intrusion detection, private key sharing, and networked hot wallets versus offline cold storage wallets.

5. Understand policy framework

Keep updating yourself with the latest policies related to digital currency such as specific regulations related to money-service business, a registered advisor, trust company, bank, exchange, or broker-dealer?

6. Corporate governance

Good governance means the board of directors and C-suite ensure that appropriate measures are taken at the right time and in the right manner. Leadership needs to mitigate risks and encourage avoidance techniques to protect digital assets?

10. Consult professionals

A professional will help you understand the risks and offer tailored advice for your particular business. They can also educate you on the claims process, should something go wrong.

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