Cybersecurity Risks and Opportunities Raised by Blockchain Technology
September 24, 2019
Introducing “Considerations and Guidelines for Advancing Cybersecurity in the Token Economy” the Latest Installment of the Chamber’s “Understanding Digital Tokens” Report
Blockchain technology has incredible potential to strengthen cybersecurity across the digital economy. Blockchain is based on the discovery of new ways to leverage existing cybersecurity technologies like public key cryptography, distributed computing, and consensus mechanisms to create ledgers that feature inherent tamper resistance and resiliency never before realized with traditional approaches. Because of its cybersecurity and other benefits, many experts foresee a time when blockchain will underpin all enterprise business models.
While the market continues to place a strong focus on blockchain’s transformative potential, less focus has been placed on its cyber risks and benefits. Today, we are pleased to introduce “Considerations and Guidelines for Advancing Cybersecurity in the Token Economy.” First, the report addresses cybersecurity considerations for public blockchains. Second, the report explores regulatory considerations from a cybersecurity perspective, addressing the application of both new and existing frameworks. Third, we provide a set of guidelines for advancing cybersecurity in a tokenized economy.
The report discusses the unique and nuanced risks that must be taken into consideration to effectively manage cybersecurity to protect tokenized assets. These include the following five considerations:
- Lack of central authorities and impact to asset recoverability
- Compromise of distributed consensus protocols
- Inappropriate access to private keys and/or endpoints
- Protocol and smart contract vulnerabilities
- Inaccurate external data sources
The report also provides guidelines that practitioners and policymakers should follow to enhance security across the token ecosystem. These guidelines aim to create a dialogue around cyber risks and encourage policymakers and practitioners to design standards for technical and business solutions to mitigate these risks.
The full “Understanding Digital Tokens” series includes guidelines on securities and non-securities tokens, anti-money laundering compliance, consumer protection considerations, as well as an economic analysis of the token ecosystem. We are also in the process of updating the compendium of country laws governing activities with digital tokens. A legal landscape from Japan and an addition to the United Kingdom report are next in the queue and will be published soon.