It is expected that the crypto industry in India will generate demand for more cybersecurity professionals, cybersecurity software, cryptographic experts, etc. This is because the ecosystem around cryptocurrency is incredibly complex for all users, be it end consumers or exchanges which actively manage hot wallet security and databases.
Last year in April, RBI had published a notification stopping banks in India from providing financial services to crypto exchanges. Considering cryptocurrencies could be misused in money laundering and other illicit activities, the Indian government authorities had announced banning it in the past.
However, with the recent developments, the drafted bill banning cryptocurrencies has been quashed by the Supreme Court. This means that India can see its crypto ecosystem finally flourishing. But, with great power comes great responsibility. So, the big question stays — is India ready to adopt crypto at a massive scale, particularly in the context of cybersecurity of digital assets?
India Needs Security Infrastructure For Crypto Assets
Even though government institutions across the globe, including India, have come to a common consensus on the legalised adoption of cryptocurrency, there is much more to be done in cybersecurity. Cryptocurrency is at the very core of cyberattacks, and we know that from hundreds of attacks that took place just in 2019.
We all remember Mt. Gox exchange hack in which approximately 850,000 Bitcoins owned by customers and the company were stolen, an amount valued at more than $450 million at the time. Other hacks such as Japanese NEM incident, the DAO hack, and many more events like this have cost people hundreds of millions of dollars. Even in India, cybersecurity attacks were executed, and Bitcoins (worth $3.5 million at the time) were stolen on CoinSecure exchange in 2018. In fact, over 4 billion dollars were stolen in crypto funds for 2019.
Crypto is also the target of ransomware and crypto-mining attacks performed by malicious hackers worldwide, even state-sponsored ones like North Korea and Iran. What’s more, cryptocurrencies are now frequently featured as preferred forms of exchange in ransomware attacks.
Crypto In India: Will The Nation Balance Cybersecurity Issues With Innovation?
The officials of the Indian government and RBI said they liked blockchain technology but expressed their hate towards cryptocurrency. On the other hand, those closely linked with cryptocurrency firms say crypto-tokens make an integral part of most innovative blockchain protocols, without which the network may not work as efficiently as intended, for purposes such as game theory and security incentives.
So, one can make an argument that money laundering was not the only concern the Indian government had when it came to cryptocurrency. The lack of proper cybersecurity standards and practices has also been a big reason behind the government’s hesitance for legalising crypto trading and exchange. According to experts, while cryptocurrency is a rapidly growing market, it is also flooded with scammers and cybercriminals.
But crypto startups are the hotbed of innovation in blockchain, and the public blockchain space has attracted the most innovative developers, as evidenced by the ICO boom. Blockchain applications, smart contracts and faster-secure payments are few of the features that Initial Coin Offerings (ICOs) brought with their innovative projects, pushing tens of billions of dollars of funding in 2017 to 2019.
It is this innovation which regulators have also recognised. In fact, during the US Senate hearing, the chairman of Securities and Exchange Commission (SEC), and chairman of Commodity Futures Trading Commission (CFTC), in their testimonies, decided on a stance of not causing harm to the digital assets market. While at the same time, he did mention that the blockchain ecosystem is riddled with cybersecurity issues and scams.
But, as investor Naval Ravikant once said India could not lose out on creating a next-generation financial exchange if it does not bank on crypto. The need of the hour, therefore, is to have the ideal cybersecurity framework in India as part of crypto trading, exchange, taxation, custody and insurance. All of that requires rigorous regulatory work and support from the government, not merely private companies and startups.
According to a renowned cyber lawyer, Pavan Duggal, cryptocurrency is nothing but electronic data. And since it is electronic data, it must be treated as financial information which needs proper security like any other software and digital asset.
Crypto banking legalisation is undoubtedly a milestone event not just for traders, but for the cybersecurity industry in general. Crypto tokens function as a medium of exchange utilising cryptography techniques to secure transactions. It is expected that the crypto industry in India will generate demand for more cybersecurity professionals, innovative software, cryptographic experts, etc. This is because the ecosystem around cryptocurrency is incredibly complex for all users, be it end consumers or exchanges which have to manage hot wallet security. The good news is that the use of cryptocurrency generally teaches users a lot about data security. Users become familiar with concepts like public-key cryptography system, hardware wallet security, digital token security, hash functions, APIs, and databases — all of which are fundamental to a good security stance for Indian internet ecosystem.
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Vishal Chawla is a senior tech journalist at Analytics India Magazine and writes about AI, data analytics, cybersecurity, cloud computing, and blockchain. Vishal also hosts AIM's video podcast called Simulated Reality- featuring tech leaders, AI experts, and innovative startups of India.