{"id":1499,"date":"2023-01-27T20:28:46","date_gmt":"2023-01-28T01:28:46","guid":{"rendered":"https:\/\/www.evertas.com\/?post_type=resources&p=1499"},"modified":"2023-11-02T08:42:59","modified_gmt":"2023-11-02T12:42:59","slug":"crypto-custodian-risks","status":"publish","type":"resources","link":"https:\/\/stg.evertas.com\/resources\/crypto-custodian-risks\/","title":{"rendered":"Common Risks for Crypto Custodians"},"content":{"rendered":"\n
The kind of math that makes cryptocurrency work relies on two cryptographic keys \u2014 one public and the other private. The private key<\/a>, usually 32 alphanumeric characters long, must remain private, because whoever has it also has control of its associated digital assets.<\/p>\n\n\n\n The original Bitcoin whitepaper envisioned a thoroughly decentralized system of value exchange between peers, with private keys stored on the asset owners\u2019 devices. In such a world, the main risk of losing access to one\u2019s keys was hardware loss or failure. Of course, crypto has evolved in ways nobody could have expected in 2008, spawning centralized exchanges that act as custodians of asset owners\u2019 private keys to facilitate the use of their platform.<\/p>\n\n\n\n In a custodial setting, the biggest threat to one\u2019s digital assets is theft by a bad actor, and given the large rewards for succeeding, many sophisticated bad actors are working hard at it \u2013 typically attempting to hack into the custodian\u2019s network.<\/p>\n\n\n\n Alternatively, an attacker may exploit bugs discovered in the custodian\u2019s transaction logic thereby generating and stealing tokens in ways unanticipated by the platform. This kind of attack directly impacts custodians and indirectly impacts their customers by devaluing the purloined asset and threatening the solvency of the platform.<\/p>\n\n\n\n