Cybersecurity is now a key part of business operations across all industries, especially so for Initial Coin Offerings (ICOs). It has become a concern for ICOs because of recent, high profile hacks – in particular the loss of approximately $40 million worth of digital currency for the DAO, a decentralized venture capital firm built on the Ethereum network, that was hacked as a result of a security flaw. ICOs must maintain a high level of security which requires attention from anyone running an ICO.
The initial reaction among many who learn of a hack is, “I thought the blockchain could not be hacked.” Hacking a well-established blockchain such as the Ethereum or Bitcoin network would still require a tremendous amount of computing power so it is virtually impossible. Instead hackers go after the point of weakness which is the entry points for transferring funds into and out of wallets and exchanges.
For those running an ICO, it’s important to take specific steps to prevent scammers. For example, it’s important not to post to an ICO directly with tokens you hold on an exchange as this can easily be hacked. Also, scammers spoof the ICO with similar looking web pages, and accounts. Many ICOs today give very specific instructions on how to place tokens on the site for the ICO.
One strategy is to take email addresses for those interested in funding the ICO and then when the pre-sale/crowdsale starts, provide funding instructions only to those who signed up. By displaying the funding instructions on the website you invite hackers to attack your site.
Hall T. Martin is the founder of TEN Capital and a builder of entrepreneur ecosystems by startup funding through angel networks, funding portals, syndicates, and more. Connect with him about fundraising, business growth, and emerging technologies.
If you are interested in tracking a startup, you can sign up for TEN Capital’s Monitoring service which tracks key startups and provides information about their revenue, earnings, and other key financial information. The first 3 companies are free for 6 months.
Signing up as an investor with TEN is easy and free. Visit our Investor Page and sign up now!
If you have any questions, please contact us at firstname.lastname@example.org.