The Importance of Private Keys

Cryptocurrencies offer a world of opportunities. Quick and easy payments, innovative financial services, and inclusivity to previously unbanked regions in the world are all made possible by the crypto ecosystem.

But with these opportunities come challenges and risks. Many crypto platforms lack strong operational, governance, and risk practices. These problems have emerged with huge ramifications in 2022 with the collapse of Terra Luna — one of the biggest stablecoins — and FTX — the second biggest exchange that filed for bankruptcy.

Beyond these collapses, there are also several high-profile cases of hacking-related theft of customer funds on centralized and DeFi platforms. These problems have reinforced the debate about the importance of private keys.

We recently caught up with Georgios Kalmpazidis, co-founder and CEO of Swaps.app, who shared his thoughts on the topic.

Q — What do you think about the current security problems plaguing the blockchain industry?

Talking about blockchains, maybe this is the most transparent, secure and democratic technology and system humanity has ever created. It’s getting increasingly popular over the years, and today besides crypto, it is widely used in many other fields, such as health care, property, smart contract, etc.

Blockchain is a relatively new technology that currently meets several security challenges, but I would like to look at those challenges from two perspectives – blockchain and users. From the blockchain perspective, most vulnerabilities are related to the sybil, 51% and routing attacks, which are common issues, are successfully taken care of by cyber security professionals.

Regarding the user side, the main challenges are phishing attacks and the security of private keys, which are some of the top issues. When we look deeper, the problems here are similar to the ones in traditional financing, and consistently guiding and educating the users is the key to protecting their funds and fighting fraudsters.  It should be one of the top priorities for the companies.

Above all the mentioned factors, there is another major problem, which is the biggest roadblocker for the industry’s organic development. I call it an irresponsible and immature business strategy, which misleads and mistreats the users bringing them enormous losses. Unfortunately, we have several similar cases in the industry that we all can recall.

Q — Do you think the collapse of major crypto platforms threatens crypto adoption?

The drop in market capitalization and what happened with some of the major crypto platforms during 2022 led to a sense of uncertainty regarding the crypto adoption rate. Past events have eroded trust in the industry and affected the market, raising the urgency over keeping private keys independently and securely.

At Swaps.app we are optimistic that the industry will survive after all those collapses. Definitely, the pace would be different, but through more comprehensive regulation, the industry will become much healthier, more trustworthy and more consistent.

Q — How important is it for users to hold their private keys?

As I mentioned earlier, the security of private keys remains one of the top issues, especially amid the current market situation. It’s the main key to the users’ funds and should be owned and kept by them. Of course, it also depends on the users’ needs and trading behaviour. Many crypto platforms offer custodial wallet services that offer high-level security and protection of the wallet and are convenient for those who actively trade crypto. In this case, users must be picky when choosing between public custodial wallets. Nevertheless, we advise always keeping most of your funds on your private key.

Q —- How can crypto users best protect their private keys from being guessed or hacked?

When protecting private keys, I always compare it with the situation when we lock the front door after leaving home. We never keep it open or leave the key on the lock. It’s the same with the private keys.  If it is weak or unprotected, your funds are at risk.

The first step, maybe a trivial one, for users to protect their private keys is to keep their credentials private from others. I call it trivial because it sounds basic, but in most cases, users mistakenly share it with hackers during phishing attacks.

Also, it’s vital to use keep the two-factor authentication on, avoid simple combinations of passwords, don’t save your password in the browsers, regularly clear the cookies and caches of your browser, and save your credential in a safe way where no one, even a close friend or a family member, has access, use malicious link detection software or apps, improve device security with antivirus software, keep the device system and browser up to date, avoid connecting to the open or public WiFi networks.

We constantly remind our users of these simple rules and encourage them to keep their personal information and credentials safe when they buy crypto at Swaps.app.

Q —-  What are the security features that crypto platforms need to incorporate to prevent high-profile hacks and scams

Security is the cornerstone of the crypto industry, and while platforms compete over price, rates, speed and other important parameters, security wins the competition. After it comes the rest.

A cryptocurrency system requires secure creation of cryptographic keys and seeds. Companies shoul examine their organization’s security measures in this area, paying close attention to confidentiality and unguessable numbers.

Maintaining cryptocurrency wallet/key usage integrity is also critical. Risks such as lost or stolen keys or unintentional disclosure of the wallet holder’s identity can be avoided with best practices such as key storage and more firm ongoing assessments.

Q —-   What do you think will be the biggest trend in blockchain for the next 12 months?

There are many blockchain trends to look out for in 2023, but the biggest one for me is the wide usage of CBDCs, as more governments will introduce their digital assets. At Swaps.app, we look forward to supporting CBDCs for users and business partners whenever they are public. The rising investment in stablecoins and more interest towards DeFi will be blockchain trends, too, during the next 12 months.

Q  —-  What has been the toughest challenge you’ve faced in our industry so far?

High velocity and trust issues in the industry were our toughest challenges. I can proudly notice that due to the consistent improvements and updates Swaps.app succeeds in providing high-quality and seamless crypto purchases for customers and quick and secure crypto and fiat payment processing for online businesses.

Also, we are very careful and selective about choosing liquidity, fraud-prevention and payment partners, making us a secure crypto platform. During the last 12 months, we’ve finished our integration with industry-leading companies, including TrueLayer, Stripe, Sumsup, and Binance, updated our services, and introduced new coins and features, making a big leap to the next chapter of the company’s history.

Swaps.app is a fully compliant and regulated European crypto company which effectively combines industry-leading security with a blazingly fast and incredibly easy-to-use platform to bring buying and selling crypto to everyone, beginner or expert, company or individual.

Image: Swaps.app blog