Security Safeguards For Cryptocurrency Transaction Management

Managing the safety of cryptocurrency transactions is possible and here is what you can learn.

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A lot of new cryptocurrency exchanges are growing daily and rapidly worldwide. With the increasing number of cryptocurrency exchanges in the world today, a lot of them are faced with the risk of cyber attack.

So, it is crucial for all investors who want to invest their money, and a lot of their money should look out for red flags when choosing cryptocurrency exchanges, as they should also do their homework and a proper background check on the cryptocurrency exchange as relating to their fees and security safeguard.

With the increasing interest of investors who are willing to trade, in this rapidly growing space, there is a need for security to safeguard cryptocurrency exchanges. Cryptocurrency exchangers are just like the e-brokerages from the investor’s standpoint.

The global cryptocurrency market has been valued above $700 billion, but the market is still lightly regulated. Some experts in cryptocurrency exchanges say people who want to invest their money in cryptocurrency should choose an exchange that suits their individual needs.

Generally, any good cryptocurrency exchange would offer a safeguard against money laundering, and set in some procedures to know their customers, like a cell-phone application for trading and tracking the price, and a quick and easy way to move cash between bank account to the site’s wallet.

But beyond these universal must-haves, there are still some key consideration that needs to be set in place to ensure ease of use and security.

Disaster Mitigation

Many exchanges have several servers that are hosted at different locations preferably different countries, just to be safe. As the popular saying goes, “never put all your eggs in one basket”.

Disaster mitigation of cryptocurrency exchanges in simple terms is best understood as the process of responding to a major failure or let down of the system as the system switches to another server that is being hosted in another location.

The disaster could be natural or man-made, so incorporating cryptocurrency to managing and mitigating disaster is attainable.  Let us assume that there is a hack, and the attacker gained full control of the entire infrastructure of the exchange.

Using false user pairing, the attacker can easily trick the 2FA user channel. But even when the hacker injects false user pairing into the HSM, perhaps the HSM fails its periodic consistency check, it will automatically shut down the signing plug-in until reactivated by an administrator.

Basically, the shutdown of the server is to ensure that the hacker stays out of the server if a server is hacked or broken; and during this time the exchanger has to switch to its other servers, to ensure continuity of trades.

For example, Binance has multiple servers offshore, even though they have multiple offices in Asia. Their servers allow them to be able to handle more than 130 coins consistently, and if a server gets broken, they rely on the other servers while they fix the broken one without causing a halt to any trade.

Exchanges Server Distribution

Basically, cryptocurrency do not have a central computer, but they are distributed across a network of typically thousand or computer. A network without a central server is called a decentralized network. Since cryptocurrency has no central computer, it means no third-party escrow intermediary is required to hold the funds of the customers in the exchange process.

Due to cryptocurrency decentralized network, transactions are faster and at a cheaper rate. The removal of the third part authenticator actually reduced the charging rates and the lag time before a transaction is processed.

The distributed servers of the cryptocurrency exchanges have made this system even more difficult to potential malicious hacks. Because of the decentralized network, every entry points that hackers could have used to hack the system have been blocked. Meaning for a hacker to get into the system, they have to compromise more than half of the whole network.

Overseas Server Location

 In other for an exchange to further improve, they engage themselves in acquiring some foreign servers. Some bit exchangers like coinbase, bitterex and the likes, makes use of cloudflare for caching. And cloudflare has servers in most part of the world.

So, you may notice that perhaps you are in say Europe, and you are making connections to servers in the United State of America, when there is a closer server to your location, say probably in Sofia (Bulgaria), or Belgrade (Serbia).

Safeguarding Cryptocurrency Transactions

A lot of cryptocurrency exchanges are keeping the vast majority of about 97% of its assets in a cold storage. This is the best protection they can have. The underlying ideology behind this is to get their assets totally offline, out of the reach of hackers.

But despite this, to properly function normally, they still need to have a type of wallet they can use to connect online with their users. The wallet cryptocurrency exchanges use to connect with its user online is called a hot wallet.

 The hot wallets are controlled with APIs, and the hot wallet is used to approve the order of customers who want to withdraw of deposit in their accounts. Because this cryptocurrency exchanges have to validate the transaction of its users with their wallets, the keys must be live.

Transaction Authentication

In a transaction authentication of a cryptocurrency, the wallets are designed with specialized software that can calculate the balance of the user by keeping track of all incoming and outgoing payments. The wallet is also designed to calculate the fee that the user would pay to the miners of the network to confirm or authenticate the transaction.

 Once a user sends a certain amount of cryptocurrency, the transaction gets broadcasted across networks, and within a few seconds the receiver would see a pending transaction on his or her wallet.

Then a miner would add the transaction and mine a block which includes the transaction. Once enough blocks have been mined, the transaction would be confirmed with ease.

Cryptocurrency offers a new frontier for many investors around the world, and there is no doubt that with the necessary safeguards in place, it can be a veritable goldmine.

Your Business Plan and You

Investors and entrepreneurs have a need for a winning business plan. Here is a look at some underlying notables.

The Must-See Notables For Crafting A Winning Business Plan

It has been observed that about 20% of new businesses pack up within the first year of their establishment, while a majority do not exceed a lifespan of five years. Many reasons can be adduced for this recurrent unfortunate phenomenon, chief among which is the use of a shoddy business plan.

It is often said that if you fail to plan, you inadvertently plan to fail. Every new endeavor requires an in-depth research on several issues surrounding the area of interest. Such a research will help you understand the concepts and how to develop an effective modus operandi to get intended results.

This is the reason every intending founder of any business needs to have an unambiguous business plan.

A great business idea is only the starting point of a promising business venture. What ensures the success of the business is a deliberate, in-depth and realistic approach in building a strategic plan to establish and grow the business till you can break even.

Though it is possible to eventually make a success out of a business without an initial business plan, it is a risk equal to traveling to an unknown place without a map or leading whatsoever.

This guide thus gives a case on the necessities of a business plan, and the possible drawbacks of not having one.

CLARITY OF VISION

The process of developing a business plan helps put your dreams and vision for your venture into perspective, enabling you to sort out unrealistic expectations and see more clearly.

More often than not, the excitement of having a potential solution that meets perceived needs of people in an area overshadows a person’s sense of caution and tact.

A business plan enables you to do some research that refines your vision to fit the real needs/wants of your target audience. A business plan also provides a document to critics who can help point out inadequacies, risks and fantasies in the business idea; helping to tweak the plan to a reasonable level.

FINANCIAL REQUIREMENTS

The major danger upcoming/startup businesses face is running out of money. It is necessary to have a near-perfect idea of what total running (capital plus variable) costs will amount to over a specified period of time, so as to draw up how to gather the required fund.

This is one of the things a well drawn business plan enables a business owner to achieve. You can safely avoid running short of cash without making any profit from the business.

RISK ANALYSIS AND MANAGEMENT

During the research leading up to writing a business plan, the prospective business person is able to spot possible risks and challenges to be encountered in the course of the business. This makes it possible to develop strategies to combat the risks in the event of their occurrence.

INVESTOR PITCHING

One of the importance of a business plan is to give a prospective investor an overview of what he intends to invest in, the risks and financial promise.

For instance, a bank would need to scrutinize the business plan of a business man seeking a loan facility to finance his business to check if the business is viable enough to repay the loan with accruing interest under the stipulated time frame.

Individual investors also need to look at the business plan to know if the business is worth the risk of their investment and see terms of repayment in case the business flops. It should also state what amount of equity the owner is providing investors if returns are not in cash.

SOURCE OF MOTIVATION

A business plan usually serves as a confidence booster in the bleak periods of a business. A look at the plan after a while will show how far you have come and overcome obstacles on your path in the business, strengthening your resolve to solve the present issues confronting you.

DIRECTION

Just as a traveler going to a new destination needs a map and maybe a GPS device for direction, an intending business owner needs a business plan to give a direction from the start of the business up till when he breaks even.

A business plan could also serve as a template for future expansion. It is a reference that can be looked up to know which milestones have been achieved and which challenge is next to be taken up.

ALIGNMENT CHECK

Challenges, new technology and emerging market data sometimes make a business owner lose originality and focus, swaying the business away from its foundational goal. A business plan therefore is important as a medium of checking if the current business philosophy and targets are in line with initial goals, and enable correction and a reset if the business has gone off its course.

BIRD’S EYE VIEW

A business plan carefully highlights the different parts of the proposed business model and their intricacies and interconnections. This gives a broad view of the relationship between the parts of the business and also the mutual effects of the capital elements (labour, capital etc.) on one another. This outlook helps to determine how each element can be varied to create optimum results at the most reasonable costs.

PRIORITIZATION

One of the challenges emerging ventures face is choosing which business establishment steps to take at particular times, which options of marketing and distribution to utilize, among other service delivery options. A business plan helps outline the focus and goals of your business such that you know which options to pick above others, and which steps in your road map should be taken before or alongside another.

CONCLUSION

From the benefits outlined so far, it is evident that having a comprehensive business plan before launching a business venture is really important to its success.

A well-researched plan serves as an anchor for the owner to fall back on when challenges arise, as well as a tool for convincing potential investors on the safety and potential profits on their investments in the business.

5 Notables In A Winning Whitepaper

ICOs have made the whitepaper famous. There is no doubt that a well-written whitepaper gives a project a huge mielage.

The cryptocurrency technology officially clocked a decade in 2018, as the Bitcoin was introduced to the public on 31st October 2008. At this time, the mysterious originator of Bitcoin, Satoshi Nakamoto published his whitepaper titled “Bitcoin: A peer-to-peer Electronic Cash System”. Cryptocurrencies are virtual financial instruments introduced to enable value to be exchanged via digital media.

In the crypto world, proponents of new currencies usually raise funds from the public to float their firm. This is like the Initial Public Offering (IPO) used by companies in mainstream investment to raise funds from the public, but in the cryptosphere it is called Initial Coin Offering (ICO).

There are several ICOs fighting daily for relevance in the crypto world, and one of the ways through which the strategies being designed for successfully floating a cryptocurrency are marketed to the public is publishing a great whitepaper.

The Whitepaper

A whitepaper in this case, is a detailed document containing an explanation of the technology being proposed for a blockchain project.

It contains an in-depth breakdown of the network of the system and how it will interact with subscribers, requirements for issuance of tokens, data on market trends, growth projections and information on investors, project team personnel and their advisors.

This is a document pitching the proposed business to investors, hence it is important that it is richly garnished to catch the interest of readers. Thus, it is important for a whitepaper to employ some important ingredients discussed below.

DETAILED PROJECT OUTLINE

One thing that can make a whitepaper stand out is a comprehensive examination of the problem the project has set out to solve. The idea is to make this simple and articulate enough to catch the attention of the reader and wet his appetite for more information on the project.

Most prospective crypto investors get to see a wide variety of whitepapers with all kinds of proposals, thus it is important to write a catchy outline that keeps the reader interested in the project.

Using clear and concise graphics to explain technical details of the problem, solutions offered by your product and the expected returns will boost acceptance of the whitepaper, and invariably the project.

This outline should contain a clear roadmap of the key events to be carried out in the business, and the deadlines set for these. This gives the investors an idea of what to look out for and how to measure the progress of the project.

WELL-RESEARCHED FACTS

A major way to enhance credibility of a whitepaper and promote its acceptance is to do in-depth research in the area the project intends to be grounded. It is important to find out where previously released whitepapers of past projects have failed, and thus posit a realistic solution to the problems they failed to see or were unable to solve effectively.

An investor who sees that data and information obtained from failed and inadequate past projects are well analyzed and used to create a solution will be easily convinced to put in his asset into the project.

SIMPLE LANGUAGE

It has been observed that not every reader of whitepapers is an expert in cryptocurrency. People who don’t know so much about the system might also come across the whitepaper, hence dishing out information in clear and simple terms is key.

In making known the root problem, solution design and expected returns on investment in simplified terms and language increases the reach of the document. Making a layman understand the whole point of the project increases the chances of getting many investors on board.

MASSIVE TOKEN UTILITY AND USAGE ANALYSIS

Every investor wants to buy a token that has vast applications and can be used for several purposes. A classic whitepaper must show how the token you are proposing can be useful to investors, such that keeping it in their portfolios turns out to be an asset to them. The higher the utility of your token, the more valuable it is to subscribers, and the higher the sales at the ICO.

Thus, realistic plans to get the token listed on popular exchanges should be clearly stated in the document, so as to put the mind of investors at rest and boost their confidence in increasing investment levels. This prevents lots of speculation and sudden dumping of your tokens by holders.

One factor that boosts the confidence of any prospective investor reading a whitepaper is a clear explanation of how you intend to spend the money you raise from your ICO. An investor who sees a clear plan detailing how their monies will be used in building the product till it is well-known and widely applicable gets more confidence in the project.

Many whitepapers lack such depth, and lots of investors have lost funds invested in projects that looked initially promising but had no clear plans for using funds to establish and improve the product. Every investor needs to be convinced that their investments won’t end up being used to fund the founder’s expensive lifestyle.

CREDIBILITY OF TEAM MEMBERS

Most seasoned investors have come to understand the importance of a great and experienced team in the success of a crypto project. It is therefore important for any serious new entrant into the crypto sphere to carefully showcase the talents and experience of the team members.

This gives prospective investors some confidence based on the proven past accomplishments of the team members. This is also important as it is one of the criteria newbies in cryptocurrency investors will prefer to do business with teams who have proven success stories to their credit. A good example is the OmiseGo project, where the team members were from the successful Ethereum project and other established projects.

CONCLUSION

Every cryptocurrency project, like any other type of start-up business, requires a well drafted pitch, which in this case is what a whitepaper represents.

It is certain that taking heed to all the tips mentioned in this guide, will help prospective project founders to write an awesome whitepaper that will catch the attention of a large audience of investors.