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Data Security In The Crypto and Fintech Industries

by cryptocreed

Last Updated on January 4, 2023 by cryptocreed

Remember when Wintermute was hacked using a compromised wallet and lost $162M in Defi operations?

Data security is essential for the crypto and fintech industries. With the ongoing growth of technological advancements — cybersecurity has become a primary concern for both industries.

The most crucial step business owners can take to protect their data is implementing appropriate security measures such as encryption and authentication. This ensures that user information is encrypted and that only authenticated users can access it. It also helps to protect user data from external threats such as hackers and phishing attacks. But this is just the tip of the iceberg!

Additionally, companies should use robust security systems that can identify threats and act fast in case of breaches. This covers many topics, including data mapping, cloud security, bad bot blocking, firewall protection, application security, and malware detection and prevention.

To handle any potential incidents involving data security, it’s also critical to have effective incident response strategies in place. By doing this, the company can swiftly fix any security concerns and lower the possibility of further damage.

In this article, we walk through 19 security measures you can take being in the crypto or a fintech industry:

List of 19 measures!

Block bad bots from the web and server

One of the ways to protect your data is to block bad bots and other automated attacks. 

This is done using tools such as captchas and reCAPTCHAs to prevent automated requests from accessing your data. ReCAPTCHAs are used to ensure that only real humans are accessing your data. Moreover, web application firewalls (WAFs) can also help protect your data by blocking malicious traffic before reaching your network.

Conduct data mapping

Data mapping is a process where businesses identify and analyse different layers of data to determine the most critical components and to ensure that the data is being used securely. 

This helps businesses understand who has access to the data and how it should be used. Moreover, businesses should also create data maps that outline any data stored, processed, or transmitted over the network. Read Osano’s data mapping guide if you want to learn more.

Use a SOC 2 audit

Security controls must meet American Institute of Certified Public Accountants (AICPA) requirements. 

A form of audit called a Service Organization Control (SOC) 2 audit verifies that data is handled, communicated, and kept securely and in line with the trust services principles and standards of the AICPA.

Secure your web application stack

To guarantee the safety and security of your data, you must secure the server, network, and databases that make up your web application stack. 

This entails ensuring that your server is configured correctly and that the most recent security protocols are being used. Additionally, it’s crucial to secure your databases with firewalls and other measures. Contact cybersecurity professionals who can assist you if you have questions about configuring your web application stack safely.

Use SSL/TLS to secure data while it is being transmitted.

SSL/TLS is a security protocol used to encrypt data. 

In contrast, it is being transmitted to ensure its security. It establishes a safe connection between two entities, a client and a web server. Malicious actors cannot access user accounts or intercept data thanks to this encryption. A reputable certificate authority should be used to purchase SSL/TLS certificates.

Implement API security standards

Since APIs enable communication between apps and services, API security is also essential in the financial and cryptocurrency sectors. 

Use API security standards like OAuth 2.0 and OpenID Connect to protect your API. By utilising these protocols, one can prevent malevolent actors.

Adhere to the principle of least privilege

This asserts that a person should only be given the minimal permissions required to accomplish their job. 

Because user privileges are restricted, this protects your data from malicious parties. Giving users the fewest access possible lowers the risk of an inside assault or careless staff members compromising your data.

Regular vulnerability scans are an excellent approach to finding security gaps and weak points in your infrastructure.

Conduct continuous vulnerability scans. 

Business owners can more readily find and remedy any holes by conducting vulnerability scans. Additionally, this helps stop attackers from taking advantage of any system security holes.

Implement two-factor authentication (2FA)

2FA adds a layer of security by requiring users to input a code or PIN that only they are aware of to access the system. This helps protect your data even if someone can access it without authority.

Enforce strong password policies 

A strong password can significantly improve data security. 

Users must follow a guideline that requires them to use lengthy, challenging passwords with capital letters, digits, and symbols. Additionally, each user must regularly change their password.

Set up data encryption keys

Saved data should be encrypted to protect it. 

Take advantage of data encryption keys to ensure data cannot be viewed or taken by malicious third parties. Keys should also be regularly changed to minimise the risk of data loss.

Implement training and awareness programs

User awareness and education are essential in the financial and cryptocurrency sectors. 

Teach your employees about security risks such as phishing and malware, as well as how to recognise them and respond accordingly. This helps in avoiding costly, time-consuming processes that come after a mishap.

Establish a backup strategy

Routinely backing up data is essential. 

This ensures that any data lost can be recovered quickly and without disruption. Store your backups in a secure location, such as an off-site server or cloud storage provider

Monitor your system and establish user access controls

Use monitoring tools to monitor any suspicious activity and ensure that the data is handled correctly. You should also set up user access controls to limit access to sensitive information.

Conduct regular penetration

Regular penetration testing and ethical hacking exercises help identify system vulnerabilities and areas for improvement. This helps you pinpoint any weaknesses in your system and patch them accordingly.

Evaluate third-party compliance

When working with third-party vendors, evaluate their data security policies and procedures. Verify that their data security protocols meet the standards you define for your business. Moreover, require them to sign a nondisclosure agreement.

Update your software regularly.

Software updates are essential for data security. Constantly update your operating system, application, and plugins as soon as new updates are released. This ensures that your system is protected against the latest malicious threats.

Follow payment security best practices.

Secure payment methods must be implemented if you’re processing payments. Take advantage of payment card industry (PCI) compliance and adhere to best practices to protect user data. Additionally, encrypt data stored on payment processors and keep customers informed of the payment process.

Enlist the help of a cybersecurity expert

If you don’t have an internal IT team or an in-house cybersecurity expert, you should hire a consultant to help ensure your systems are secure. 

Consequently, you can allocate time and resources to the most critical areas of your business.

Furthermore, consider investing in cyber insurance to cover any damages or losses incurred due to a cybersecurity incident. Cyber insurance will cover the costs of remediating a breach and help you recover quickly.

There are many ways to bolster your data security in the crypto and financial industries. 

While no one security solution will provide 100% security — businesses should use multiple measures to protect their data and networks. 

Implementing the appropriate policies, protocols, and security solutions is necessary for any business dealing with crypto or traditional currency.

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