Due to the news of rampant thefts at Bitcoin exchanges this past week (Mt. Gox, Poloniex, Flexcoin) it is becoming apparent that there's a dire need for some security standards in the Bitcoin community to ensure compliance and build client trust. The media is jumping over every hack story that comes out and shouting that it's insecure. You can't blame people for thinking this way, because at this point it's a legitimate fear.
There is no question that we need a standard process for third party security experts to be able to review exchange processes and software from top to bottom. If you know of some sort of external security company that already does this, feel free to post.
Perhaps exchanges could be verified on a certain level of compliance and receive a letter or badge to post on their website for proof of audit. Maybe someone like Andreas Antonopoulos would be interested to open this discussion further.
Items to address in audit:
- Source code, deployment and version control procedures
- Bitcoin software and protocol implementation
- Server platform (software versions, port scanning, server logging, brute force protections, DDOS protection, backups, redundancy, etc)
- Emergency shutdown and startup procedures
- Physical security (security cameras, electronic facility monitoring, alarm systems, swipe-cards, etc)
- Use of AML / KYC procedures and encrypted offsite storage of client documents
- Offsite cold storage (multiple locations) and use of keys, with logs of all activity
- Onsite hot wallet and use of keys
- Minimum of email verification or 2-Factor Authentication mandatory for withdrawals on all client accounts
- Options for clients to set a withdrawal limit on their account (similar to a bank)
- Alerts available for unusual activity on client accounts, with additional verification option (email or phone call) in case of sudden large withdrawals
- Staff background checks
- Staff fraud prevention training
- On-site restrictions for staff electronics and storage devices
- Restricted access areas for developers and system-critical staff
- Procedures for reporting illegal or suspicious activity to law enforcement
I will add to this as more feedback comes in. PLEASE contribute! This is a great community and the development of this ecosystem is happening and will continue happening thanks to you!