A large amount of cryptocurrency exchanges are kept being hacked in recent years. According to experts, cyber security is its Achilles’ heel. Biometrics with its uniqueness is believed to provide a stronger user authentication and help trace hacker identity.
The enormous amount of trading money on crypto exchanges and the anonymous nature of trades have made crypto exchanges juicy targets for attackers. Up to date, crypto exchanges have lost more than US$1.7 billion-worth of cryptocurrencies in total. The most recent high-profile attack is Japanese Coincheck which has lost more than $400 million in altcoins earlier this year. There’s an urgent need to better protect these currencies by using stronger identity authentication technologies. A stronger authentication means an organization uses two or more factors including password, physical token, and biometrics. Password and physical token are already been used by many organizations at great cost because of password churn, distribution of physical devices and recovery but biometrics are relative newcomer that adds new benefits.
Besides password and PIN, adding an additional biometric authentication to the identity verification can strengthen fraud detection. In some countries, companies can utilize government identity checks. For example, India’s Aadhaar and eKYC systems are available for real-time biometric checks. Crypto exchange could also benefit to track down hacker identity. In many cases, currencies are transferred to hacker’s account, but the problem is no one knows who owns the account. It’s impossible for the forensic agency to catch the hacker and the exchanges to claim back their lost money. If user account is linked with a real identity like biometrics, we can bind the responsibility of a user with his/her transactions.
Biometrics which is most known for fingerprint, face and iris recognition has gone mainstream and received user acceptance since the launching of biometric integrated smartphone. With its advancing technology and falling price, biometrics is definitely a worth-using feature to enhance security of crypto ecosystem. According to experts, small exchanges tend to spend less on security than bigger exchanges which makes them more prone to attacks. Therefore, security features should be paid more attention and deployed strictly on every exchange. Not only user’s account, but exchange employees’ accounts are also hacker’s hot spot in order to get administrative access to a huge number of exchange users. Biometrics is not easily compromised, guessed or stolen like other credentials. Hence, two-factor-authentication (2FA) via biometrics would have helped in this case.
Cyber-attack not only causes damages to crypto exchanges but to organizations globally. In its 2017 report, Cybersecurity Ventures predicted that cybercrime will cost the world $6 trillion annually by 2021, up from $3 trillion in 2015. It’s unsurprising that organizations and regulators are opting for biometrics to prevent cybercrime. European Commission’s newly updated Payment Services Directive (PSD2) requires payment service providers to apply two or more authentication factors with biometrics as one of the elements. Such regulation should be applied on every exchange to bring security and transparence to the transactions. Not only users, exchanges but regulators also play a crucial role in cryptocurrency and blockchain’s further development. Although biometric will not solve all the problems but it surely helps build a more secured crypto networks.