Why biometric identification is becoming an essential feature of cryptographic security

Biometric security is gaining traction as crypto platforms adopt eKYC and liveness tools to combat growing digital threats.

Biometric technologies use physical characteristics to enable identity verification, such as voice, fingerprints or facial features. These methods help prevent criminals from stealing data to make illicit transactions, which is why crypto exchanges and individual users are increasingly integrating them. The exchanges use technologies such as electronic know your customer (eKYC) and activity detection to create a multi-layered security system.

Using eKYC allows customers to be verified efficiently and remotely, without requiring their physical presence. Face2Face technology verifies users’ identities by comparing their ID photos to their faces, ensuring that they are the rightful owners of the account. Liveness detection prevents videos or images from being used to mislead facial recognition systems, provided the person being verified is physically present in real time.

Interest in biometric identification is increasing due to security concerns. Recently, Trust Stamp submitted confirmation requests to an EU regulator and the SEC regarding its secure biometric wallet, designed to hold cryptocurrencies and stablecoins while offering quantum security technology and biometric validation, positioning it between software and hardware storage solutions. But which solution is the most secure?

Evaluate crypto wallet security and reliability

Crypto hacks constantly make headlines, leading to an understandable focus on security and reliability. Before exploring them, you need to understand what a crypto wallet actually is. Essentially, a crypto wallet is something you can’t live without if you plan to buy and hold crypto or NFTs. A private key and a public key are generated when you create an account. The wallet stores your keys and allows you to manage your assets, sign transactions, initiate transfers, generate new addresses, track wallet balances, and interact with dApps.

There are many types of crypto wallets, including hardware wallets, paper wallets, and downloadable mobile apps. However, hardware wallet security can match or even exceed the reliability of a biometric identification tool. Resembling a USB drive or a small gadget, hardware wallets protect the private keys of online systems, significantly reducing the risk of malware attacks or online hacks. When you initiate a transaction, your private key never leaves the secure environment of the wallet, because the respective data is signed in the device.

Despite their offline design, these wallets can connect to the internet when plugged into a device to execute a transaction. Typically, this interaction is brief and the private keys remain protected.

Biometric and hardware wallet features can coexist

Biometric and hardware wallet features can coexist to improve security. Hardware wallets can support fingerprint authentication as well as thousands of cryptocurrencies and NFTs. Some are equipped with biometric keys and EAL5+ certified security chips, allowing offline private key storage and supporting a large number of addresses. There are open source and isolated hardware wallets that can operate via QR codes and feature biometric readers and security chips.

Seen separately, biometric and hardware wallets have their advantages and disadvantages. Hardware wallets provide a high level of security because private keys are generated and stored offline. As they say: not your keys, not your crypto. At the same time, it’s worth mentioning that hardware wallets don’t actually store your assets; these remain on the blockchain. A certain degree of technological knowledge is necessary to exploit specific solutions, such as cold storage. Once they have their seed key, passphrase, and password set up, some people even run a few rounds of wallet deletion and restoration before sending funds.

Weigh the pros and cons

Proponents of biometric identification believe it can add a much-needed layer of security, and a glance at the latest headlines is enough to understand their point of view. According to security experts, North Korea has infiltrated up to a fifth of crypto companies. Experts estimate that more than a third of crypto companies’ applicants are North Koreans trying to find jobs, as they are not allowed to apply for jobs under their real identities due to international sanctions. They have found a workaround that involves recruiting others to serve as fake employees, whom they use to infiltrate systems and steal data. According to recent data from the US Treasury Department, North Korean cybercrime operations have netted over $3 billion in crypto.

Biometric identification is typically used to compare users’ faces to faces captured during identity verification. Unlike codes or passwords, facial features, fingerprints or voices cannot be guessed, phished or forgotten. An essential part of multi-factor authentication is “something you are”, which category these characteristics belong to.

Biometric systems follow a thorough process consisting of basic steps to ensure security, including capture, extraction, conversion, comparison and verification. The system starts by capturing a live image of your face or other biometric trait and analyzes a specific feature, such as jaw shape. It then converts the feature into a key or digital model and compares the stored reference to a new live sample upon connection. Access is only granted if the match is intense.

Some systems store biometric data in its original form, which can raise security and privacy concerns. Other systems turn biometric data into a cryptographic key and avoid storing it altogether, providing more reliable built-in privacy protection.

Critics say biometrics provide an added level of convenience, not security, and say they are not sufficiently reliable. False negatives and positives can occur, which is why a standard password still unlocks a consumer electronic device when biometric scanning fails. Biometric identification features can make devices less reliable, more complex, and ultimately more likely to fail. Each login option opens up an additional attack vector, and while you can change a password, you can’t change a finger if someone manages to copy your fingerprint.

Beyond a novelty: the future of biometric identification

Biometric identification is becoming an essential feature of cryptographic security thanks to the added security it provides, making it much more than a notable new addition to storage options. Features like facial recognition or fingerprints can coexist with traditional wallet features like passwords and passphrases to ensure a safe journey for crypto users, regardless of their experience and expertise.