The security of assets is essential to business. In some cases, digital assets represent the true value of the company. Digital value has taken center stage now that Bitcoin and other cryptocurrencies have made it into the mainstream. However, asset protection plans do not always properly align with succession plans. As an example, consider the recent case of a Canadian cryptocurrency exchange in which the CEO passed away, taking the private keys to the company’s cryptocurrency with him. These wallets held more than $100 million in the enterprise’s money. The company proved unable to return payment to investors and essentially went bankrupt. This is just one example of succession planning failing to be in sync with digital asset protection plans.
Protecting a Company’s Cryptocurrency
Most of those familiar with cryptocurrencies understand the importance of keeping a private key. Those who own such alternative currencies must also protect their private keys. The loss or theft of a private key is likely to result in theft of digital value in the near future. However, if a business is not actively trading a cryptocurrency, those digital assets should not be stored on conventional hosted wallets or exchanges. Otherwise, the digital asset will be subjected to unnecessary risk. Third-party wallets and exchanges store private keys on the behalf of users. These groups store an abundance of currency so they are often targeted by evildoers. If such an attack proves successful or if there is an issue with the host server, the value the coins present will be subjected to considerable risk.
Securing Digital Assets Offline
Instead of relying on hosted wallets, plenty of businesses are securing cryptocurrencies away from the web through cold storage or cold wallets. The cold storage approach empowers businesses to hold private keys within an environment that is completely disconnected. From external devices to paper, desktop applications, hardware wallets and beyond, there are all different forms of cold storage. Do not select a cold storage option until you have considered your unique business’s needs as well as how access to the storage will be managed and implemented in the company’s succession plan.
Cold storage is not the only means of securing digital assets. Company executives should work hand-in-hand with attorneys and digital security personnel to apply practices for information governance. From asset tracking to data redundancy, the transfer of business knowledge and succession planning must be accounted for in order to ensure truly comprehensive digital asset protection in full accordance with the rest of the business.