EN Wallet Security Reporthttp://tokeninsight.com
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Preface
Digital Wallet Security Report
At this current stage, about 340 digital wallets have come to exist
in the market. Due to differences in
product form, private key storage mechanism, and data retention
integrity, they may exhibit different
features in different use-cases. These features may become
vulnerabilities in certain circumstances
and cause digital wallets to be attacked. Once a security issue
arises, the possibility of users' digital
property might be stolen, and because of the particularities
associated with the structure of digital
currencies, stolen assets become very difficult to recover; this is
why wallet security is so important.
TokenInsight Inc. has conducted research and analysis on the
overall developments of the wallet
industry, the structural characteristics of different wallet
projects, and identified user security by
researching, testing, and reviewing the data of nearly 120 wallet
projects. From December 2018, our
organization has set out to build a complete system and framework
of industry-wide security risk
classifications and performance evaluation models. We hope this
report will provide useful
suggestions for wallet users and project developers.
TokenInsight pays close attention to the development of the wallet
industry. At present, we have
completed the evaluation of nearly 120 wallet companies on an
international scale. Our organization
has already covered the list of leading projects for different
types of wallets such as hardware wallets
and software wallets. This wallet security report data comes from
our TokenInsight database, the
projects themselves, and publicly availible data, providing solid
support for the empirical research of
the wallet industry .
Table of Contents
1. Executive Summary
2. Industry Overview 2.1 Wallet Overview 2.2 Overview of the Wallet
Security Industry
3. Technical Risks 3.1 Carrier Risks 3.2 Private Key Storage Risk
3.3 Network Protocol and Login Risks 3.4 Trading Risks 3.5 Asset
Transfer Risks
4. Artificial Risks 4.1 Supply Chain Risks 4.2 Privilege Chain
Risks
5. Security Industry Outlook 5.1 Expansion of the Security Auditing
Business 5.2 The Rise of Compatibility Wallets 5.3 A Stumbling
Block to the Asset Management Business
6. Appendix
5 6
17 19
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. Executive Summary 1. As of December 2018, there are now more than
340 wallet projects, which increased by
approximately 30% compared with 2017, while the number of wallet
users exceeded 34 million. As
of the second quarter of 2018, user growth rates were over 10%, but
the growth rates in the third
quarter of 2018 fell to 7%. According to Google Trends, global
attention towards the digital industry
peaked in January 2018, but then fell rapidly after February and
remained steady through the year.
2. In terms of security incidents, hardware wallets have seen many
problems in dealing with remote
transaction attacks, supply chain security and preventing
brute-force attacks; while software
wallets were more affected by phishing attacks of access page and
private key leaks. In 2018, the
loss caused by wallet security problems totaled about $1.2 billion.
By risk classification, the main
problems seen in the wallet security field can be classified into
technical risks and artificial risks.
3. Technical security issues involve the following aspects: carrier
risk, private key storage risk,
webpage hijacking risk, login risk, transaction risk, asset
transfer risk, etc. The risk of webpage
hijacking includes HTTPS man-in-the-middle hijacking and DNS
hijacking. This problem requires
the user and the project side to work together to solve. At
present, the two-factor defense set by
the project party has different defense capabilities due to
different technical specifications, and the
transaction risk is still an urgent problem to be solved.
4. In the security risks faced by digital wallets, in addition to
the security threats caused by
technology, it also includes the risks brought by the manual
operations of different wallets due to
business needs, including supply chain risks and privilege chain
risks. At present, the industry has
had effective control of supply chain risks; and the privilege
chain risk is caused by the centralized
storage of the wallet, which points to the operational risk of
internal staff. At present, there is no
effective control method for the privilege chain risks caused by
problems such as private key
control and manual transfer.
5. In terms of development prospects in the security field, the
demand and depth of the wallet
security review business will further increase due to the increase
of the wallet project in 2019 and
the unsound security review framework; as new users will increase
in 2019 and the security
requirements of the wallet are different at different stages, it is
estimated that the wallet supporting
the centralized storage & decentralized storage architecture
will be favored by the market; with the
rapid growth of the wallet asset management business, the reliance
of the underlying centralized
private key storage architecture on the manual management system
will be further increased. If
such artificial risks cannot be effectively controlled, the
security risks of the digital assets stored in
the centralized wallet will be amplified and eventually hinder the
development of the digital asset
management business.
. Industry Overview
2.1 Wallet Overview
More than 80 new projects were established in 2018, which increased
by about 30% compared to 2017. In the field of wallet security, the
loss caused by security vulnerabilities in the use of wallets in
2018 was about $1.2 billion. The security incidents were relatively
concentrated in the leading projects with large users and digital
asset storage.
5GLOBAL TOKEN & RATING AGENCY
0
20
40
60
80
100
Graph 2-1 Global digital wallet growth SourceTokenInsight
1 cryptocurrency wallet: (2018)
Null 2 3 4 6 7 9 10 15 16 17 18 19 20 24 25 27 28 32 34 36 39 40 41
42 43 48 51 53 56 59 62 69 80 82 84 86 87 90 95 100
() () cryptocurrency wallet: (2018) Country
From the perspective of the global distribution of wallet search
trend, most of the countries with high
attention to the wallet are located in Africa, Oceania and North
America. Singapore has also entered
the top 10 of attention.
In 2018, the number of wallet projects increased by about 80, and
the total number of projects
reached about 340. The increase was lower than in 2017 but still
higher than in 2016 and before.
Graph 2-2 Geographical distribution statistics of Wallet global
search trend SourceTokenInsightGoogle Trends
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2.2 Overview of the Wallet Security Field
The chart below shows several serious security attacks on the
wallet recently (since the focus is on
the security analysis of the wallet's technical architecture, the
following incidents do not include the
theft caused by the attack on the exchange).
6
Since the beginning of 2017, the security attacks and doubts of
wallets have two characteristics: real-
time and wide-ranging. Whether it is a hardware wallet or a light
wallet, security holes are inevitable.
Some wallet projects were attacked just after they entered the
market, reflecting that the digital wallet
market is currently in the initial stage of technology or
management in the security field. The
architectures of various security audits and parameter
standardization have not been established.
Feb Cryptocurrency hardware wallets Ledger which got 75 million
dollars in the B round financing was exposed to
vulnerabilities
Bitcoin wallet developed by John McAfee, Bitfi hard wallet project
was broken
Myetherwallet wallet had a security incident and hackers stole at
least $13,000 in two hours
Hackers stole $750,000 worth of bitcoin using Electrum wallet
vulnerabilities
Bitpay wallet had problems when using third-party services, the
project side recommended users to transfer assets
2018
Aug
2019
Apr
Jan
Nov
Dec A group at the Chaos Communications Congress claimed to master
the method of cracking most hardware wallets and demonstrate
it
Graph 2-3 Statistics of wallet projects suffered from security
attack SourceTokenInsight
Intel chip vulnerability incident continued to ferment, triggering
mass panic of software wallet
2017
Nov
Dec
Ethereum wallet Parity has a system bug, the developer starts the
emergency mechanism, users' assets are frozen
Jan
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0
2
5
7
10
12
Graph 2-4 Comparison between wallet vulnerabil ity loss and
exchange vulnerabil ity loss SourceTokenInsight
Technical Risks
Carrier Risk
Graph 2-5 Classification of wallet risk vulnerabil ity
SourceTokenInsight
Due to their different internal architectures, wallet projects have
large differences in storage methods
and business modules. Regardless of the type of wallet, there are
different levels of security risks in
terms of private key storage and transaction security. The loss
caused by wallet vulnerabilities in
2018 was about $1.2 billion, 1.4 times the loss of the exchange in
2018.
After conducting data research on nearly 120 projects in the wallet
industry, TokenInsight found that
the security problems that arise in the use of wallets mainly
include technical risks and artificial risks.
The technical risks can be divided into carrier risk, private key
risk, network risk, trading risk, login risk
and asset transfer risk, the artificial risks include supply chain
risk and privilege chain risk.
Trading Risk
. Technical Risk
3.1 Carrier Risk
By product form, wallets can be classified into hardware wallets
and software wallets. The carrier of the hardware wallet is a
physical device with a dedicated encryption chip, and the private
key is stored in a protected area within the device. Taking Ledger
as an example, its structure is composed of a security encryption
chip, a display screen, a push button, etc. In addition to the
basic private key storage and transaction functions, the wallet has
detailed functions such as PIN verification, seed repair, and
transaction initiation confirmation. The hardware wallets account
for about 24% of the wallet projects in the market, the rest is the
software wallets. Generally, the security level of the hardware
wallet security encryption chip is required to reach CC EAL4 (that
is, the financial encryption chip standard). According to
TokenInsight statistics, projects that meet CC EAL4 and above
account for about 65% of the total project. The failure of the
security encryption is one of the reasons for the security problems
in the use of the wallet.
According to the time of storage and transaction of digital assets,
technical risks involve the following aspects: carrier risk,
private key storage risk, network protocol risk, login risk,
transaction risk, asset transfer risk, etc.
8GLOBAL TOKEN & RATING AGENCY
Graph 3-1 Comparison of the number of wallets
SourceTokenInsight
24%
76%
35%
65%
Graph 3-2 Comparison of the security level of hardware wallet
encryption chip SourceTokenInsight
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Graph 3-3 Statistics of chip implementation standard for wallets
with eligible secure encryption levels SourceTokenInsight
According to TokenInsight's 2018 Most Valuable Wallet - Hardware
Wallet List (see Appendix for
details) Top10 samples, the processing chip security level is up to
70%. Trezor's Model T, One and
KeepKey do not use financial-grade security encryption chips, the
rest are all up to standard. This
reflects that in the digital wallet market, especially in the
hardware wallet market, there is currently no
agreement on industry standards, and parameter normalization is
still one of the problems that the
digital wallet industry needs to solve.
CC EAL4+ CC EAL5 CC EAL5 + CC EAL5+ CC EAL6
The other type is the software wallet, which basically has three
forms: PC, Mobile, and Web. Since
computers and mobile phones are not professional encryption
devices, it is generally considered that
the carrier security of the PC wallet and the mobile wallet is
lower than that of hardware wallet; the
Web wallet is considered to be less secure due to the need of
frequent connection with the network
during operation.
Therefore, it is generally considered that the security of the
carrier is: hardware wallet > PC / Mobile
wallet > Web wallet
Software Wallet Forms
Graph 3-4 Software wallet forms SourceTokenInsight
Note: CC (Common Criteria) is the result of the unification of
various existing standards by the
International Organization for Standardization and is the most
comprehensive evaluation criterion at
present. CC divides the evaluation process into two parts: function
and guarantee. The evaluation
level is divided into EAL1, EAL2, EAL3, EAL4, EAL5, EAL6 and EAL7
in seven levels.
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3.2 Private Key Storage Risk
Wallet private key management is the core of digital asset
security. The essence of the wallet is to help users manage and use
the private key conveniently and securely. Wallets can be
classified into two types according to the storage method of the
private key: centralization and decentralization.
In the decentralized wallet, the private key is kept by users and
will not be uploaded to the database of the wallet project party.
The centralized wallet means that the private key is centrally
managed by the project party. The latter's financial risk will be
more concentrated in the wallet project side, and its centralized
server becomes the target of being attacked more than the
decentralized wallet. Therefore, from this perspective, it is
generally considered that the wallet private key is safer for
decentralized storage.
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Graph 3-7 Comparison of the number of wallets with different
storage methods of private key TokenInsight
Upload to project side server for
unified management
Graph 3-5 Centralized wallet private key management mode
SourceTokenInsight
21%
79%
At present, the proportion of decentralized wallets is higher than
that of centralized wallets, and about
79% of wallets are decentralized wallets. It reflects the consensus
that digital wallet users have
higher security in decentralized wallets.
Private key of user 1
Private key of user 2
Private key of user 3
Local storage
Local storage
Local storage
Graph 3-6 Decentralized wallet private key management mode
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40%
60%
In addition, the user's private key generation operations and
transactions may be recorded and
obtained by other users, and the core code of the wallet may be
reverse broken to trigger such an
attack. In order to facilitate the users' trust and accelerate the
algorithm upgrade of the product, some
project parties choose to open source the program, upload the code
to Github or other communities to
publicize.
Except the potential risk of being attack due to the program
vulnerabilities and the failure of upgrade
in time, the open-sourced code of this project is beneficial for
the secure storage of users' digital
assets in the long term. According to TokenInsight's 2018 Most
Valuable Wallet-Light Wallet-China's
List (see Appendix for details), 30% project in Top10 is
open-sourced, while in the statistics of nearly
120 wallet projects at home and abroad, the open source ratio is
60%, and the web-side wallet
accounts for the majority.
Note: The open source program here refers to the core code and
related programs that constitute the
wallet architecture. It is considered as partially open source when
the publicity program is not
compilable.
China-SPV/centralized
Open source × × × × × × √ × √ √
Graph 3-9 2018 Most Valuable Wallet - Light Wallet - China l ist of
partial evaluation data SourceTokeInsight
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Graph 3-10 Reasons analysis for users' webpage hijacking
SourceTokenInsight
Most of the digital asset transactions require network connection.
Users may suffer from phishing attacks due to HTTPS hijacking and
DNS hijacking. 1It is not uncommon for users in centralized
exchanges to suffer losses due to HTTPS hijacking and DNS
hijacking. There are two precautions against this:
1) Collect and safekeep the link address of the wallet to reduce
the possibility of entering the fake website
2) A professional firewall can be used to intercept and filter
phishing websites on the network.
Graph 3-11 Comparison of the number of wallets with or without
two-factor verif ication login SourceTokenInsight
42%
58%
Two-factor verification proves the identity of the visitor through
two independent and irrelevant evidences. Using this technology in
the login phase can improve the security of the user's digital
assets. Currently, the wallet with this function accounts for about
42% of the industry projects. Most of the project parties use the
dynamic password provided by Google plus the user's original login
password as the two-factor verification architecture. However, this
technology may fail in the face of sender ID spoofing attacks, so
users should develop good security awareness to deal with such
attacks. 2
Analysis of the reasons for
webpage hacking
Browser problem
User's reason
Project side reason
Unverified server certificate
Unverified domain name
1. The webpage hijacking risk refers to the attack the user might
suffer from during interaction with the data network when using the
wallet if the user does not verify the certificate of access
address or the certificate has expired. In the process, hijackers
will be stealing access data and can ultimately cause the user's
digital assets to be at risk of loss. 2. In the Sender ID spoofing
attack, the attacker uses the official identity of fake Google to
send emails to the user to obtain other private information such as
the dynamic password, and finally log in as the user. This type of
attack is extremely harmful for some wallets with low security
defense capabilities.
Expired server certificate
The transaction requires a private key signature for authorization,
including multiple signatures and single signatures.
Single signature means that only one user has a private key and has
full autonomous trading rights.
The multi-signature mode is that a digital asset is managed by
multiple people, and the private key holder who needs to meet the
lower threshold signs with the private key. For client wallets that
are less encrypted than hardware wallets, the multi-signature mode
has the advantage of reducing individual risk and improving the
security of digital asset transactions. According to statistics,
wallets that support multi-signatures in the client wallet account
for 31%.
Graph 3-12 Comparison of the number of wallets with or without
multi-signature SourceTokenInsight
According to the Top10 (see Appendix) projects in the 2018 Most
Valuable Wallet - Light Wallet -
Overseas list published by TokenInsight, the proportion of projects
supporting multiple signatures is
low. Although the multi-signature mechanism is currently more
secure than single-signature, it is more
widely used for large-scale managed projects or enterprise-level
customization, and the technology is
not yet popular for individual users.
Graph 3-13 2018 Most Valuable Wallet - Light Wallet - Overseas l
ist of Top10 evaluation data SourceTokenInsight
31%
Green Address
Bread Wallet
Multi- signature √ × × √ √ × × × √ ×
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For individuals troubled by high cost when using the
multi-signature mechanism, "private key +
transaction password" mode offers an alternative solution to reduce
the trading risk. In addition to the
private key, users also need to input password to confirm and
complete the transaction of digital
asset. BitKeep Wallet has adopted the DESM algorithm based on
SHA256 + AES256 + cloud
authentication encryption system to double encrypt user's
single-signature wallet. The method of
using single-signature mechanism with private key and double
confirmation with password can greatly
reduce the trading risk.
Centralized exchange asset management
Enterprise Digital Asset Management
Transaction secondary
In terms of usage specifications, the current secondary
confirmation mechanism adopted by the
wallet industry uses fixed strings, dynamic passwords, and
user-specific attribute verification. From
the perspective of cryptography, it is generally considered that
user-specific attribute verification has
a higher security level. For example, Math Wallet uses biometric
security authentication technologies
such as fingerprints and face recognition for large-value
transfers.
According to TokenInsight's incomplete statistics, the wallet
industry has a large number of projects
using fixed strings in the transaction secondary confirmation
password usage specification, and the
number of projects using the user-specific attribute verification
method is the least. The technical
specifications adopted by the wallet industry to reduce transaction
risk remain to be unified.
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When a mobile device or hardware wallet carrying a client wallet is
lost, it may result in the loss of digital assets. Since the
general mobile device does not have a professional encryption
function, the probability of theft of digital assets is large. The
hardware wallet generally has the function of brute force cracking.
For extreme situations, some hardware wallets have a violent
disassembly and self- destruction module, that is, the data is
destroyed before the illegal visitor obtains the private key. This
kind of the wallets accounts for about 9% of the hardware wallet,
the current popularity is not high.
Graph 3-16 Number of hardware wallets that support self-destruction
SourceTokenInsight
9%
91%
Another way to safely transfer digital assets after the terminal is
lost is to use the HD (Hierarchical
Deterministic) wallet mentioned above. The specific implementation
standard is the BIP protocol
series. The complicated technical operation can be simplified by
the BIP protocol. BIP protocols for
mainstream wallets include BIP-39 and BIP-44.
Simply speaking, the protocol can turn a complex private key into a
mnemonic, basically in the form of
24 (or at least 12) words + passphrases (null or no), and the user
will back up the generated
mnemonics. If the wallet is lost, the digital asset can be safely
transferred using the same standard
BIP wallet.
Graph 3-17 Number of wallets that support different BIP protocol
standards SourceTokenInsight
BIP-39 14%
BIP-44 86%
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In order to solve the problem that the broken login PIN of wallets
without secondary protection can
easily cause security issues, it is also possible to use the
blockchain's own framework technology to
perform secondary asset encryption, so that the user can control
the digital assets more strongly. For
example, if the ETH is stored by using the smart contract address
instead of the ordinary address, the
transaction will be successful only after both the private key
signature and a separate password are
required to invoke the contract each time the ETH is transferred
out,
The scheme is currently in use at the EtherSafer wallet project,
which features low cost and a high
level of security. The secure storage of ETH wallets using the
contract address can effectively reduce
the risk of theft of the users' digital assets.
HD wallet architecture + Ordinary
Simplified trading process +
assets
Hardware wallet biometric confirmation
In addition to using the HD (Hierarchical Deterministic) wallet to
secure the transfer of assets when losing a wallet, the wallet will
also include a secondary transaction confirmation password in the
program. Generally, it is a PIN or a user-specific information
attribute (such as a fingerprint). This module can delay the speed
at which the private key is cracked when the wallet is lost, and
strive for time for the security transfer of users' digital assets.
Once the wallet's anti-brute force module is broken and the user's
private key is stolen, the digital asset is considered to be
lost.
Graph 3-18 Private key anti-brute force architecture supported by
mainstream wallets SourceTokenInsight
Graph 3-19 Comparison of wallet features using ordinary and
contract addresses SourceTokenInsight
Web transaction secondary password
Mobile transaction secondary password
4.1 Supply Chain Risk
Supply chain risk is particularly evident in the security threat of
hardware wallets. As a physical product, from the production of the
enterprise to the use of the user, the hardware wallet may
experience problems such as product damage and firmware tampering
caused by the above process. The supply chain risk management
methods currently used by project sides engaged in hardware wallet
production generally are: 'logistics security guarantee' + 'initial
verification'.
Among the security risks of digital asset storage and transaction,
in addition to the security threats caused by technology, there are
also risks brought by the manual operation of different wallets due
to business needs, including supply chain risk, authority chain
risk, etc.
17GLOBAL TOKEN & RATING AGENCY
Graph 4-1 Number of wallets that support logistics security
guarantee SourceTokenInsight
We can see from Graph 4-1 and 4-2 that 80% of the hardware wallet
projects support logistics
security guarantee in response to supply chain risks. The main
approach is to monitor its own product
links and coordinate with the logistics chain. 90% of the hardware
wallet projects support initial
verification, and most project parties are already taking measures
to control the risks. The project
parties who are pursuing the user experience have also adopted some
special methods, such as
peer-to-peer logistics, which can reduce the supply chain risk
again. Overall, the digital wallet industry
has achieved initial success in supply chain risk management and
control.
20%
Note: Usually the meaning of supply chain risk refers to materials
flowing through the supply chain from production and distribution
enterprises to users, generating different flows such as business,
logistics and information flow, involving many processes such as
distribution processing, storage, packaging, transportation,
loading and unloading, distribution and information processing. Any
risk caused by problems in these links is called supply chain
risk.
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90%
Graph 4-2 Number of wallets that support init ial verif ication
SourceTokenInsight
In TokenInsight's 2018 Most Valuable Wallet - Hardware Wallet List
(see Appendix for details), there
are 22 wallets from 16 companies at home and abroad,
includingLedgerBlue with a comprehensive ranking of 11.7 points at
the top of the list and BEPAL-Q ranking top in China with a
score of 9.4 points, ranking sixth overall.
Graph4-3 Hardware wallet comprehensive ranking Top10 list
SourceTokenInsight
Hardware Wallet
Name Blue Model T Nano S KeepKey ONE BEPAL Q Digital Bitbox
Bepal Pro S BiPal Keywallet
Touch
Overall Rating 11.7 9.8 9.7 9.5 9.4 9.3 9.1 9 8.7 8.3
Ranking 1 2 3 4 5 6 7 8 9 10
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Graph 4-4 Centralized wallet physical chain + privilege chain
schematic SourceTokenInsight
In many centralized wallets, in addition to physical chains
(usually hardware wallets or full-node wallets) that can implement
asymmetric encryption algorithms, there are also privilege chains
(usually management systems composed of staff) that control
transactions, time, amount, etc. as shown in the following graph of
the managed system designed by InVauIt: the off-net storage room
can be regarded as the physical chain, and the network storage room
can be regarded as the privilege chain, general centralized
exchanges and trustee institutions engaged in large-scale custody
services use such structures for digital asset management.
Graph 4-5 Centralized wallet physical chain + authority chain
structure example SourceInVault
Privilege chain contacts
Authorize the privilege chain
privilege chain
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The physical chain and the privilege chain are isolated from each
other in the architecture design.
After being authorized, both sides can contact and operate. When
the transaction is over, the two
sides are again isolated. However, it can be found that the
privilege chain actually has absolute
control over the physical chain. Once a problem occurs in any
dimension such as the time, object or
amount of the transaction, the users' digital assets may be
potentially threatened or damaged.
In addition to physical chain risks, the asset security of a
centralized wallet is also subject to the
artificial risks of privilege chain. This is particularly evident
in the asset losses suffered by the
centralized exchanges. According to statistics, about 40% of the
centralized wallet losses in 2018 are
related to privilege chain risks. In February 2019, the founder of
the QuadrigaCX Exchange was
missing (currently the Indian government has provided a death
certificate), resulting in the loss of
$195 million digital assets of the exchange, which pushed the risk
of privilege chains to the forefront of
the digital wallet hosting security problems. Because the privilege
chain risk is uncontrollable, it has
become a difficult problem for asset security in the
industry.
40%
60%
Graph 4-6 Privilege chain risk incidents as a percentage of
centralized wallet security incidents
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5.1 Expansion of the Security Audit Business
In view of the industry development trend and the above-mentioned
problems, it is currently believed that the hotspots in the
security field of the wallet industry in 2019 will focus on the
improvement of the security audit system, the development of
wallets based on the security architecture, and the management of
artificial risks of wallet asset management businesses.
21GLOBAL TOKEN & RATING AGENCY
With the development of the wallet industry, the market will
further expand. According to statistics, the
creation time of existing wallets was initially concentrated in
2013. As of December 2018, the number
of digital wallet projects has accumulated to more than 340, an
increase of about 30% compared with
2017.
0
80
160
240
320
400
Graph 5-1 Number of global digital wallet projects
SourceStatista
In terms of the growth rate of wallets, 2017 increased by about 62%
compared with 2016, which was
higher than ever before. Although the growth rate in 2018 slipped
down, it is still much higher than
the year before 2017. This reflects that the digital currency
market is currently of a certain size. It is
expected that the mainstream wallet projects will increase by at
least 20 in the global market in 2019.
The original wallets are also actively expanding and adding new
services. For example, Legder Xapo and other wallet companies
focusing on secure storage have begun to deploy emerging
businesses such as digital asset custody and asset management. Both
the depth and breadth of the
wallet industry itself are growing rapidly.
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At present, all security reviews of wallet projects on the market
have the following categories:
The first category is the technical risk security review. The
current security review is based on the following: carrier risk
review (system vulnerability scanning, new user registration
security, carrier environment detection, client integrity
detection), private key storage risk review (mnemonic creation
security, mnemonic storage security, private key generation
security, private key storage security, locally stored data
sensitivity detection), network protocol risk review (network proxy
detection, certificate verification in https communication), login
risk review (user information security, private key import
security, transaction password security), transaction risk review
(transaction creation security, transfer address security
detection, transaction signature security, transaction
confirmation, balance inquiry accuracy) etc.
However, the above-mentioned security auditing business only audits
part of the technical risks of mobile terminals, there are fewer
technical risk auditing for hardware wallets and PC wallets.
Overall, the digital wallet security audit services need to be
expanded. Therefore, based on the continuous increase of wallet
projects and services and the incompleteness of the existing
security review framework, the demand for wallet security audit
business will further increase in 2019.
Mobile wallet security audit
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According to statistics, as of the Q4 quarter of 2018, the number
of global digital asset wallets users was 31.914 million, an
increase of 10.4% from the previous quarter and an increase of
48.3% from the previous year. If the number of Internet users is
the development target of the number of digital currency users, the
total amount of users has 100 times expansion space. This means
that it has great development potential and huge market space. With
the development of blockchain technology, the market will usher in
more diversified development in 2019, and more people will access
and flood into the blockchain and digital currency industry.
Graph 5-3 Global digital currency user size SourceStatista
0
800
1,600
2,400
3,200
4,000
Due to the lack of understanding of asymmetric cryptographic
algorithms and the unskilled use of decentralized wallets, This
part of emerging users will choose a centralized wallet as a
storage tool to reduce the security risks of their digital
assets.
After a period of time, as professional knowledge increases, users
will seek to use a decentralized wallet to pass on the security
risks of digital assets from the wallet project to themselves. At
this time, the user has a certain stickiness to the original
centralized wallet.
If the wallet project party can provide another private key
decentralized storage solution at this time, the user can satisfy
the upgrade requirement of the user's private key security storage
and can retain the user's original operating environment, and the
project party can reduce the user loss and increase the
attractiveness of new users.
In summary, based on security and market development
considerations, wallets that support decentralized storage &
centralized storage in 2019 will be a popular choice for
users.
Late user selection
Graph 5-4 Development of wallet user selection intention
SourceTokenInsight
TokenInsight
TokenInsight
TokenInsight
TokenInsight
TokenInsight
24
Graph 5-5 2018 Most Valuable Wallet - Light Wallet - China's List
Evaluation Data SourceTokenInsight
Among the Top10 wallet projects in the Most Valuable Wallet - Light
Wallet - China's List (see
Appendix for details), Math WalletCobo Wallet have begun to try
compatibility services. According to the development of the market,
the wallet that supports the centralized and decentralized dual
storage
function will be more and more favored by users, and the new
security issues brought about by the
architecture upgrade are also worth noting.
China-SPV/centralized
Kcash Wallet Bitpie MEET.
ONE Math Wallet Secrypto
Overall Rating 9.0 8.6 8.2 8.1 7.7 7.2 6.6 6.0 6.0 5.9
Ranking 1 2 3 4 5 6 7 8 9 10
TokenInsight
TokenInsight
TokenInsight
TokenInsight
TokenInsight
25
In terms of project functions, the wallet industry is not limited
to the storage and transaction solutions to digital currency
assets. The functions added on this basis include information
service, asset management, lending, and DApp access. With the
development of public chains and the involvement of traditional
financial institutions, projects such as project docking, asset
management and lending are rapidly emerging. More than 40 wallet
project parties have launched digital asset management
services.
32%
68%
Graph 5-8 Number of wallets with and without asset management
businesses SourceTokenInsight
Wallet function overview
Storage and transaction
Financial product
Fixed term
financial manage
Current financial manage
26
Most of the organizations that have launched digital asset
management services use a centralized
approach to manage digital assets in the form of 'physical chain' +
'privilege chain'. With the rapid
expansion of this business, the security risks are also increasing.
Especially due to the uncontrollable
nature of the 'privilege chain' risk, the fully managed wallets are
very likely to face similar security
vulnerabilities as of the centralized exchanges.
The custody and asset management services in the wallet business
are developing rapidly. Among
the Top 10 of the most valuable wallet - light wallet - China list
released by TokenInsight (see
Appendix for details), Cobo WalletBitKeepToken Pocket and 3 other
wallets have launched financial management services, and digital
assets stored in the centralized wallets will grow rapidly.
For the asset management services that are about to develop
rapidly, the artificial risks such as
private key control and manual transfer brought by digital asset
centralized storage will be an urgent
problem to be solved. If it is impossible to find a solution that
reduces the artificial risks, the security of
digital assets will be plagued by artificial risks.
Graph 5-9 2018 Most Valuable Wallet - Light Wallet - China List
Top10 SourceTokenInsight
China-SPV/centralized
27
Appendix
Chip Security
Level Rating
Operatio n
Perform ance
Overall Ratings
Blue 6 Enterpri se 16 10 0 2 8 10 11.7
Model T 6 Individu al 6 6 0 0 10 10 9.8
Nano S 6 Individu al 16 10 0 0 8 10 9.7
KeepKey 6 Individu al 3 4 -1 2 10 10 9.5
ONE 10 Individu al 5 6 -1 0 10 10 9.4
BEPAL Q 8 Individu al 6 6 0 2 6 6 9.3
Digital Bitbox 10 Individu al 2 4 0 0 10 10 9.1
Bepal Pro S 6 Enterpri se 6 6 0 2 6 6 9.0
BiPal 6 Individu al 9 8 0 0 10 6 8.7
Keywallet Touch 10 Individu al 6 6 0 0 8 6 8.3
Swiss Bank in Your Pocket 8 Individu
al 4 4 0 0 10 6 7.4
0 Individu al 4 4 0 2 6 4 7.1
LUBANSO X1 6 Individu al 6 6 0 0 6 6 7.0
KASSE HK-1000 10 Individu al 6 6 0 0 7 6 7.0
CoolWallet 8 Individu al 3 4 0 0 8 6 6.7
TokenInsight
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28
Name
Op en So urc e
Mul ti- sig nat ure
Tw o- ste p
Nu mb er of Co mm ent s - Rat ing
Sta rs
Sta rs -
Rat ing
Fin anc ial
China-SPV/centralized
Cobo Wallet 1 0 1 1 1 2,531 10 5 10 1 0 1 0 1 9.0
Qbao Network 1 0 0 0 1 373 8 4 8 1 1 1 1 1 8.6
BitKeep 1 0 0 0 1 77 4 4 8 1 1 1 1 1 8.2
Token Pocket 0 1 0 1 1 58 2 4.0 8 1 1 1 1 1 8.1
imToken Wallet 1 1 0 0 1 286 8 4.5 9 1 1 0 1 0 7.7
Kcash Wallet 0 0 1 1 1 160 4 4 8 1 0 1 1 0 7.2
Bitpie 1 0 0 0 1 403 8 4 8 1 1 0 1 0 6.6
MEET.ONE 0 0 0 0 1 6 0 5 10 1 1 1 1 0 6.0
Math Wallet 0 1 0 0 1 24 2 4 8 1 1 0 1 0 6.0
Secrypto 0 1 0 0 1 76 2 3.5 7 1 0 0 1 1 5.9
Overseas-SPV/centralized
Freewallet Series 1 0 1 1 0 504 8 4.5 9 1 1 0 1 0 7.7
HB Wallet 1 0 0 1 1 377 8 4 8 1 0 0 0 1 6.6
Edge 1 1 0 1 1 66 2 4.5 9 1 0 0 0 0 6.1
Coinbase Wallet 0 0 1 1 0 201 4 4 8 1 1 0 0 0 5.2
Copay Bitcoin Wallet 1 1 1 0 1 95 4 3.5 7 0 0 0 0 0 5.1
Citowise 1 0 0 0 1 622 10 5 10 1 0 0 0 0 5.0
Uphold 0 0 0 1 0 2,638 10 5 10 1 0 1 0 0 5.0
Trust Wallet 1 0 0 0 1 1,793 10 4.5 9 0 0 0 1 0 4.9
Green Address 1 1 1 1 0 27 2 3 6 0 0 0 0 0 4.8
Bread Wallet 1 1 0 0 1 989 10 3.5 7 0 0 0 0 0 4.7
Wallet List
29
Wallet Listssamples are divided into SPV and centralized wallets.
The output is divided into domestic development wallet and foreign
wallet.
A total of nine dimensions are Boolean values.
Hierarchical certainty - whether multiple addresses can be
controlled by a private key
Yes: +1 point; No: 0 point
Whether the wallet is open sourced
Whether the wallet has dual verification?
Multi-signature - a dimension mostly owned by the enterprise-level
wallet One of the indicators for measuring safety
User experience: transaction services; market information;
financial tools; DApp access; social functions Yes: +1 point; No: 0
point
Private key storage location User retention, wallet retention,
third party retention +1 point, 0 point, -1 point
Popularity The first data source of comments is the App store, the
US account; The second source is google play; the rating stars are
in the same order.
Take the quartiles of the number of comments10 points, 8 points, 4
points, 2 points, 0 points)
Stars *2 as star rating
Hardware Wallet
Wallet Price The lower the wallet price, the higher the score
(enterprise and personal wallet separately)
<80 usd:10 points 80-100 usd: 8 points >100: 6 points
Supported currency The higher the number of currencies, the higher
the score If the storage of ERC20 tokens is supported, extra points
can be gained.
<5: 4 points 5-7: 6 points 8-10: 8 points >10: 10
points
Executive standard The higher the standard, the higher the score,
which is an additional subtraction
BIP44: 0 point BIP39: 1 point
Type There are different forms such as tablets, U shields, cards,
etc. Score according to friendliness.
Tablet: 2 points Others: 0 point
Chip security level The higher the security level, the higher the
score CCELA 4+ 6CCELA 5+ 8
Operating conditions of manufacturers
Excellent The company received more than $10 million financing, has
leading technology and feasible profit methods; Good The company
received less than $10 million but more than $1 million financing;
the technical level is in the upper reaches of the industry and
profit methods are feasible; General The company received less than
$1 million financing, the technical level is in the middle reaches
of the industry, and the profitability has bottlenecks.
Excellent 10 pointsGood 6 pointsGeneral 4 points
TokenInsight Inc. Global Token Data & Rating Agency
www.tokeninsight.com
[email protected]
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