As the world comes of age in the digital landscape, many industries are evolving to integrate digital solutions. Most notably, there is an emerging asset class dubbed ‘digital assets’ which is now a fundamental asset in several companies. Digital assets are typically components that businesses use to grow their online presence; this includes resources such as websites, social media accounts, business processes and applications, to mention a few.
That said, the latest type of digital assets are blockchain-related instruments. According to a definition by TokenSoft CEO Mason Borda, digital assets are a digital representation of valuable items on a blockchain network,
“A digital asset is a digital representation of something of value, for which ownership is verified and recorded on a distributed ledger.”
While blockchain is still a nascent technology, there are many use cases that have proven to fit the traditional finance model. Digital assets feature at the top of this list. Today, it is possible to keep the record of an off-chain asset such as social media identities on a blockchain network. Even better, individuals and corporations can leverage this type of digital asset to access a larger part of the crypto ecosystem.
However, it is not all roses, digital assets come with a large security threat to all stakeholders. At the very least, this type of asset can be compromised by malicious players who have established a fort in the digital economy.
The Security Threat on Digital Assets
With more organizations switching to digital ecosystems and remote working, there has been an increase in security threats over the past year. According to Check Point’s mobile security report of 2021, 97% of firms faced a mobile security threat in 2020 while at least 46% of organizations had an employee who downloaded a malicious application.
In most cases, the attackers were looking to compromise valuable digital assets such as company strategy or clients’ information. Some of the most notable approaches used by these malicious players include credential stuffing, phishing attacks, ransomware attacks, data breaches and IoT exploitation.
Coming down to the blockchain and crypto industry, attacks on Decentralized Finance (DeFi) protocols have also surged significantly. Crypto intelligence firm Cipher Trace recently released a report, revealing that DeFi accounted for 76% of the hacks, with the biggest one being the Poly Network where the attacker drained $600 million.
Given that DeFi has positioned itself as the future ecosystem of digital assets, the security trends are worrying for both veterans and newbies. So, what can be done to change the narrative? Luckily, the tech industry is never short of innovations. There are several ways corporations and individuals can protect their digital assets. The next section of this article features some of the most fundamental approaches to protect one’s digital assets.
Protecting Digital Assets in the New Era of Innovation
As the adage goes, change in most cases is often inevitable. Likewise, preparing for change can distinguish winners from losers. The new era of innovation calls for individuals and corporations to take charge of their digital assets, not only by effective management ,but also implementing the right security measures.
- Encryption Tools
Encryption secures data through several mathematical techniques coupled with a password and a key that allows the receiver to decrypt the message. While the concept stems from cryptography, encryption can be used as a way to secure digital asset property. Companies that own digital assets can leverage this technique to encrypt valuable information, allowing access only to stakeholders who have the decryption key.
There are two types of encryption that one can choose; symmetrical and asymmetrical. The former is when both the sender and receiver have a similar key that can decrypt the encrypted information. Meanwhile, the latter involves the use of a public and private key which means that only the receiver can decrypt the most valuable information. The latter approach is more predominant in blockchain ecosystems with off-chain wallets serving as the best example.
- Decentralized Blockchain Identifications
As mentioned earlier, blockchain technology has introduced an ecosystem where records can be stored on distributed ledgers. This type of identification has since been dubbed ‘decentralized identifiers’ (DID); ideally, identities stored on a blockchain network can be verified and authenticated to prove they belong to a particular individual or company.
So far, there are several innovations working on DIDs, but some are taking the game a notch higher through biometrically-secured faceIDs. One such ecosystem is Avarta, a blockchain-powered platform that seeks to provide traditional and crypto companies with established standards of authentication and proof-of-identity.
The Avarta DID solution also features a multi-sig wallet and a multi-chain decentralized identity management platform, enabling users to authenticate their identity and access various DeFi services. Notably, Avarta’s FaceID serves as one’s private key which means that only the user can decrypt the underlying information (wallet address and seed phrase).
- User Authentication Tools
User authentication tools have grown in popularity with notable mentions such as the Google two-factor authentication (2FA). At the core, this type of security measure involves adding an extra layer of security that requires users to provide or verify more information besides their passwords.
For instance, a Google 2FA on protecting digital assets will require an individual or firm to verify a specific operation through the user authentication tool. There are also 2FA solutions pegged on one’s mobile number, allowing the user to verify through a randomly generated code that is sent to the number upon a login request.
Though 2FA has been around for sometime, more companies are implementing this measure following the shift to remote working. Stakeholders in some industries have gone an extra mile to adopt more rigorous 2FA functions, some of which require the users to verify through physical attributes such as fingerprints and iris scans.
Wrap Up
The digital asset landscape is on fire and will likely continue to grow as we usher in the new era of innovation. According to an analysis by Zion Market Research, the digital asset management industry is expected to hit $8.1 billion by 2024, marking a CAGR of 18.4% since 2018. Going by this trajectory, it is evident that more corporations and individuals are seriously considering investments in digital assets.
That being the case, security is not a negotiable issue in a space where billions are expected to trickle in. The current stakeholders of the digital asset industry have an enormous task to play in enhancing security measures to make the sector more lucrative and sustainable in the long term.
