Safety of crypto currency no longer cryptic

October 10, 2017 8:00 am

cryptocurrency blockchain data

Crypto currency is the way forward, sooner than anyone has imagined, at least in the UAE, with 2018 announced by authorities as the year when e-currencies, like Bitcoin, but also cloned others, will the launched along with Blockchain technology, in which deals and bids are permanently registered and saved in the ether.

On September 26th, 2017, Dubai’s government’s economic website announced that it had established a partnership to facilitate financial transactions through contactless payment.

However, in mid September, 2017, the Dubai Financial Services Authority cautioned that Initial Coin Offerings (ICOs) had not been regulated and that no licenses were offered to firms within the Dubai International Financial Centre and as such warned prospectors about the dangers of rushing into this.

It is just one aspect of safety that is surrounding all the hoopla that the technology is offering.

Read: 2018 will be the year for crypto currency in UAE

Not quite at ease yet

Bank of America Merrill Lynch’s commodity and derivatives strategist Francisco Blanch said to CNBC in July 2017 that Bitcoin may soon be considered legitimate, proposing three main criteria that the e-currency must meet, in order to become a reserve currency of the world: safety, liquidity and return.

“Bitcoin and other cryptocurrencies score well on some, and not so well on others,” Blanch said. But particularly on safety, he said that Bit Coin did not score that well.

“The lack of a centralized decision-making process or authority creates risks such as a currency split,” he said.

“Also, risks such as hacking, identity theft, or outright scams are a recurring problem.”

Security challenge

Secure cold storage of crypto currencies such as Bitcoin can be a difficult proposition.

According to Gemalto, a global digital security provider, traditional paper wallet-based solutions may be effective for the most basic use cases, but present a substantial challenge for more complex environments as they do not scale or address compliance requirements for strong key management.

It is why Gemalto and Ledger, another prominent security and digital infrastructure specialist, have partnered to create an enterprise-grade solution for secure cold storage based on SafeNet ProtectServer Hardware Security Modules (HSM) and Personal Security Devices (PSD).

“This solution enables multi-currency and multi-signature authorization wallet management, without any limitation of the number of accounts or addresses, and with a full customization of signature policies for each account,” said Gemalto on its site.

An even more recent collaboration between the two aimed at delivering a high-assurance security infrastructure for crypto assets applications and enabled a variety of use cases, such as safely launching investable crypto based products, or simply stocking virtual currency.

The infrastructure can customize account-based digital signature policies and heightening security requirements for user authentication of these transactions.

The joint Gemalto and Ledger solution consists of an integration of Ledger’s Blockchain Open Ledger Operating System (BOLOS) into Gemalto’s HSM.

read: 7 things you NEED to know about crypto currency

Banks showing interest

Crypto currencies now represent a market capitalization of $137 billion, according to Bloomberg’s World Exchange Market Capitalization Index.

This compares to $7.8 trillion for gold, according to the World Gold Council, and $83.8 trillion for the global stock market, according to, a site that tracks such capital investments.

Gemalto says that multiple large banks and hedge funds have announced plans to develop and implement blockchain, both for internal and external purposes.

Eric Larchevêque, CEO at Ledger, said: “As the market value of blockchain-based solutions rises, so does the need for bank grade security products, when financial institutions are looking for dedicated, certified solutions.”

Todd Moore, Senior Vice President of Encryption Products at Gemalto, added: “With the proper security to protect communication, devices and users, blockchain can offer a trusted platform for parties that do not have an existing relationship to do business efficiently and transparently.”

Crypto benefits

Gemalto says that, compared with traditionally brokered transactions, a secure blockchain application for crypto currency trading simplifies a financial organization’s portfolio and contract management process by reducing costs and saving time.

“Blockchain is a disruptive new technology that allows transactions to be carried out over peer-to-peer networks by acting as a distributed ledger that gives transactional authority directly to each counterparty involved, and enables faster, more efficient transaction and settlement processes,” a Gemalto statement said.

It added that blockchain was an ideal model to address the scalability concerns for widespread adoption of IoT.

“The massive volume of communication and data produced by IoT devices requires transactions to take place at the edge, a problem blockchain solves, and offers efficiency, user privacy, validation of the user’s identity and transaction and, secure offline storage to prevent theft or spoofing.”

Read: You can now rent Dubai property with bitcoin



Hadi Khatib
By Hadi Khatib
Hadi Khatib is a business editor with more than 15 years' experience delivering news and copy of relevance to a wide range of audiences. If newsworthy and actionable, you will find this editor interested in hearing about your sector developments and writing about it.