Communication: “The Safest Storage Method for Crypto Assets”

Jochen Werne, Chief Development Officer and Chief Visionary Officer Prosegur Germany

Source: O2 Telefónica / Collage: ASBS

WIf you look at the money, it quickly becomes clear that times have changed. All in all, around 1.5 billion euros were stolen in the ten biggest bank robberies. According to the analysis company Crystal, cryptohacks amounted to around 3.9 billion euros in 2021 alone.

Jochen Werne is not surprised. “Everything of value arouses desire.” Werne is Chief Development Officer and Chief Visionary Officer Prosegur Germany. He develops new services for the German subsidiary of the international security group. Prosegur Crypto GmbH offers such a service, Werne is CEO: a cash storage facility for digital assets – without an internet connection.

New money, new risks, new security concepts

Security on the global market Prosegur is famous for its yellow money carriers and has grown up in the cash business. With the boom in cryptocurrencies, the Madrid-based company faced new challenges. The goal: to be able to offer the most secure storage method in the world for cryptocurrencies. In Germany, Prosegur works with the business customer department at O2 Telefónica together. Together, they set up a new level of security – the highest level because billions in Bitcoin, Ethereum and other digital currencies are at stake.

Cryptocurrencies like Bitcoin or Ethereum require a new level of security

Cryptocurrencies like Bitcoin or Ethereum require a new level of security

Source: iStock / Collage: ASBS

“Our goal is to help give the new ecosystem the trust it deserves through security components,” says Werne. “Our history is closely connected with the security of any kind of asset. Kryptodepot is a logical development of our business.”

ISLAND2 connects safes and cash conveyors

ISLAND2 Telefónica takes over the communications for Prosegur Germany, and that completely. Karsten Pradel, director B2B at O2 Telefónica explains: “It starts with mobile service for 3300 employees. In addition, around 1000 yellow money carriers and network lockers from Prosegur with a global SIM card from O2 Telefónica equipped. The armored vehicles and security containers are connected directly and securely to the Prosegur company network. The routes taken by money carriers can be documented and secured via GPS.”

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ISLAND2 also provides fast fiber optic access and secures internal communication with VPN access (Virtual Private Network) against outside access. A software-controlled data network (SD-WAN) is completely new: this makes it possible to manage Prosegur data traffic intelligently and quickly.

O2 Telefónica ensures communication at the highest level of security and thus helps to protect the virtual currencies

O2 Telefónica ensures communication at the highest level of security and thus helps to protect the virtual currencies

Source: iStock / Collage: ASBS

In this way, the environment on site can be secured against threats – where the internet traffic originates. An intelligent component connects all communication channels and always selects the best one. It has three advantages, says Sören Jahnke, Global Solutions Engineer at O2 Telefónica: “Lots of bandwidth at a low price, more redundancy and thus communication security (because copper cable, fiber optic or mobile communication is used depending on availability and needs) and a better user experience because the services work better: ‘Everything runs much faster'”

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It becomes critical when people and the Internet come into play

Prosegur wants to offer the ultimate crypto custody method. Transactions in cryptocurrencies are indeed safe. Your ledger is the blockchain. The crypto money is deposited there. Blockchain is a digital document; digital copies of this document are stored simultaneously on a large number of computers – this makes them tamper-proof. If a transaction is made, the chain of data contained in the document is supplemented in all copies with a block of data that can never be deleted again.

But it becomes critical when people and the Internet come into play. Anyone who trades cryptocurrencies needs a wallet. This is a kind of digital wallet. The wallet software, in turn, creates a digital signature and processes a transaction using the owner’s private key. This is the only way they can access and use their crypto treasures stored in the blockchain. “You can always trace every step of what happened when and where,” says Jochen Werne.

Danger to property and people

This wallet can be made available in an app or on a computer and is usually connected to the internet. Then you talk about a “hot wallet” – it is practical because transactions can be made quickly, but susceptible to hacker attacks. A “cold wallet” (also called “cold storage”) works without direct internet access – it can be a USB stick, for example. The form of asset storage has two problems. First, a cold wallet can be a target for extortion or robbers, as can a gold bar or large amounts of cash stored at home. Second, cold wallets are only secure as long as they are disconnected from the internet.

Prosegur secures crypto assets like in a spy movie - in a box without an internet connection

Prosegur secures crypto assets like in a spy movie – in a box without an internet connection

Source: iStock / Collage: ASBS

“Refrigeration is not enough for us,” says Jochen Werne. “Because having large assets under the control of one person puts not only the assets at risk, but also the person who controls them. Criminals not only resort to direct threats of violence against that person, but they often threaten family members as well.” Prosegur Crypto therefore takes a different approach.The company stores customer data in a hardware security module (HSM).The technology works pretty much like we’d expect it to in a spy movie.

No chance for “Ocean’s Eleven”

“It’s a computer in a shielded, military-grade case that’s kept in one of our high-security facilities and not connected to the Internet,” explains Werne. If, contrary to all expectations, such a device falls into the wrong hands, it will delete the stored data. Security protocols then ensure that the data can be reconstructed via a very complex system provided with appropriate codes. Prosegur has a number of high security facilities. The location of the crypto stacks are, of course, secret.

“The entire protection is fully electronically monitored with various modules and multi-level security protocols. These are, for example, intelligent fences where possible dangers are analyzed with artificial intelligence,” says Werne. Even an attack like in the movie “Ocean’s Eleven” – George Clooney’s crew simply turns off the power there – would not work.

We believe we can offer the most secure storage method for crypto assets in the world

And yet, Prosegur customers can initiate blockchain transactions online – the following is a sophisticated process. The hardware security module connects to a computer network that enables blockchain transactions.

The technology comes from crypto technology company GK8; the method used here is what is known as multi-party computing (MPC). The transaction is transferred to the user’s blockchain via multiple security authorities using patented technology that does not require a direct connection to the Internet. This ensures the critical time of the transaction. “Everything else stays in cold storage” – most of the time the crypto assets are in Prosegur’s high security box without internet connection. Jochen Werne: “We believe we can offer the most secure storage method for crypto assets in the world. We are currently preparing to introduce this service with the appropriate license in the highly regulated German market.”

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