New Cold Wallet Custody Solution Strives to Eliminate Cryptocurrency Hacks
GK8, a blockchain startup based out of Tel Aviv, Israel, has made some significant strides in its mission to improve cryptocurrency security and convenience solutions.
On September 18, 2019, the firm announced completion of what it is calling the world’s first and only secured cold wallet with hot wallet functionalities, which eliminates the need for an internet connection in order to send transactions on a blockchain.
“GK8 experts have developed proprietary cryptographic techniques that enable real-time blockchain transactions of digital assets without any need for an internet connection,” according to a press release shared with Bitcoin Magazine. “These techniques provide a secure environment to sign blockchain transactions and execute automatic reconciliation confidently. The company’s techniques … can bypass core assumptions related to cryptocurrency transfers and eliminate attack vectors to any asset transfer.”
The release did not elaborate on how exactly these techniques access blockchains or validate transactions without an internet connection, but it did note that GK8’s product is already being used by customers who manage around $1 billion worth of assets, including cryptocurrency-focused brokerage company eToro.
Addressing Crypto’s Custody Problems
One reason frequently offered for the slow adoption of cryptocurrency has been security concerns around the custody of these assets. And it’s true that cryptocurrency custodians, such as exchanges, don’t have the best history of protecting customers’ investments.
However, institutional interest has been growing in the space, and GK8 believes that the security offered by its new product should be leveraged by those who want to serve as custodians.
“GK8 is currently targeting financial institutions, custodians, exchanges and hedge funds which hold cryptocurrencies,” according to the press release.
While most custody services do have built-in safeguards for maximum security, such as key sharding — a process in which a private key is broken into separate distributed pieces and shared with trusted parties — GK8 appears confident that the best way to protect crypto assets is to keep them offline altogether.
“GK8 develops a high security custodian wallet solution, using an exciting and unique approach to cold wallet security,” said Eran Tromer, a founding scientist of Zcash and a member of GK8’s advisory board, according to the release. “Inspired by high assurance critical infrastructure systems, it uses state-of-the-art cryptographic techniques to minimize the wallet’s attack surface and block the influence of a potential attacker on security-critical components.”
GK8 was founded in July 2018 by Lior Lamesh and Shahar Shamai, who now serve as CEO and CTO, respectively. In addition to this latest project, the company is developing other blockchain solutions targeted at cryptocurrency exchanges, hedge funds and asset custodians.
In general, the world of tailored custody services is booming as major cryptocurrency players look to get a piece of Wall Street. BitGo, Bakkt and Fidelity are some of the most recent entrants into the market. Cryptocurrency trading heavyweights like Coinbase and Gemini have launched their services, with Coinbase’s acquisition of Xapo’s custody arm bringing its total assets under custody to a reported $7 billion.
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