Image for post
Image for post
The value of individual digital assets has lifted off

The Rapidly Increasing Value of Digital Assets Demands Better Security

Vault12
Vault12
Nov 12, 2018 · 4 min read

There was a time when the most important things people stored in the cloud were photographs and resumes. Now digital assets include bank account credentials, cryptocurrency, car keys, and house keys. The value of these assets has dramatically increased, so the protection needs to be dramatically upgraded too, commensurate with what is being protected.

A digital asset is a digitally stored, intangible object that is owned (by someone or something) and could have value.

However, one could argue that it isn’t quite right to describe a digital asset in such this way. Changes in the world over the past few decades have warranted a change in the definition. Ten years ago, a digital asset was something very different. What once represented images and documents now potentially represents entire financial systems, information oceans, and access points to the control of anything and everything.

Image for post
Image for post

As a thought experiment, consider the evolution of cloud sharing. Early iterations of cloud sharing were always intended for people to store items of relatively personal value: photos, documents, videos, animations, audio, or other multimedia content. It wasn’t until cloud sharing was possible in the way late implementations like Dropbox established that the storage of digital assets on the cloud began erupting in popularity.

Security Cost and Risk

Car keys on a phone are already in deployment for many cars. The cryptographic keys giving smartphones access to cars, homes and other precious assets are of immense value. Yet the mechanisms to secure them have not kept pace.

Cryptocurrency and Blockchain

“The Winklevosses came up with an elaborate system to store and secure their private keys. They cut up printouts of their private keys into pieces and then distributed them in envelopes to safe deposit boxes around the country, so if one envelope were stolen the thief would not have the entire key.”

“How the Winklevoss Twins Found Vindication in a Bitcoin Fortune” by Nathaniel Popper, New York Times, December 19, 2017

Billions of dollars of blockchain-based cryptocurrency have been lost to hacks or unfortunate occurrences.

Image for post
Image for post

20% of all Bitcoin is lost forever. That’s $20B, in fact, in 2018 alone, $1.1B has been stolen.

Cryptocurrency and digitization have altered the notion of a digital asset — from what once represented information on a machine into something that represents valuable identity, big data, and finance objects.

With this in mind, the security of these digital assets is a huge concern. In accordance with this abrupt spike in the valuation of digital assets, the security measures used to secure these assets need to be improved. Right now, there are just a few options for securing cryptocurrency and other digital assets; and all of them possess some single point of failure for the user.

Therefore, how custody of these emerging classes of digital assets is handled must be considered. Threats to the security of cryptocurrency storage need to be analyzed, and the correct frameworks for digital custody need to be designed accordingly. Digital custody needs to be explored, improved, and researched vigorously if this rapid demand for stronger security is to ever sufficiently be met.

In future articles, we will look at digital custody and how individuals are dealing with the risks and challenges of protecting their cryptocurrency and other digital assets using Vault12.

Vault12

Protecting the future of money

Medium is an open platform where 170 million readers come to find insightful and dynamic thinking. Here, expert and undiscovered voices alike dive into the heart of any topic and bring new ideas to the surface. Learn more

Follow the writers, publications, and topics that matter to you, and you’ll see them on your homepage and in your inbox. Explore

If you have a story to tell, knowledge to share, or a perspective to offer — welcome home. It’s easy and free to post your thinking on any topic. Write on Medium

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store