In our first two posts, we discussed the rising cost of crypto fraud and the different types of crypto fraud threatening the customers of crypto platforms. Now, we tackle a question that sits at the heart of every security decision: what’s the return on investment? We’ll make the case for why cybersecurity shouldn’t be seen as a cost, but as an important component for growth - and can even generate a new revenue stream. Let’s unpack why.
During WWII, engineers reinforced returning bomber planes in the areas that were pockmarked with bullet holes. At least, they did so until mathematician Abraham Wald pointed out a flaw in their thinking: the planes that returned were hit in the pockmarked areas. The planes that didn’t return were hit in unmarked areas. Those should be the areas to reinforce.
It’s a logical error called survivorship bias, where we focus too much on what survives a selection process and not enough on what doesn’t. In crypto, survivorship bias explains why platforms that haven’t seen significant levels of fraud often underinvest in security. But crypto fraud isn’t a hypothetical: it reached an estimated $40.9 billion in 2024. That’s why proactive security isn’t optional. It’s what will keep your platform airborne.
The primary obstacle to mass adoption is no longer the complexity of the industry. According to CoinCover’s 2023 Securing the Future of Cryptocurrencies report, the two main barriers preventing wider crypto adoption are market volatility and security concerns. While volatility is an inherent characteristic of an emerging asset class that no platform can control, security is entirely within your power to address.
A Deloitte study confirms this finding. It identified cybersecurity as the leading barrier to digital asset acceptance across markets. Similarly, FCA research found that 39% of UK consumers consider security to be the most important factor when selecting an exchange platform.
For platforms looking to grow their customer base, these findings reveal that security actively drives customer acquisition. It gives potential customers the confidence to take their first step into crypto. With robust security solutions, platforms can convert a higher percentage of visitors into customers.
When customers fall victim to fraud, they don't just leave your platform. They leave the crypto ecosystem altogether. The study Crypto Fraud and Investing Behavior* discovered that victims of crypto fraud reduce their investments in similar platforms by approximately 36.5% for at least a year after experiencing fraud. This represents a significant long-term reduction in trading volume and overall market participation.
The impact extends beyond crypto too. The effects of fraud spill over to traditional financial markets, with victims’ new monthly investments in both crypto and traditional markets dropping by 34.7%. This particularly affects platforms that provide their customers with both TradFi and crypto investment options, as a growing number of platforms do.
Beyond improving conversion and retention rates, security also offers significant opportunities to create new revenue streams. With CoinCover’s built-in account protection, you can transform security from a cost center into a profit driver by:
This model creates a win-win scenario where customers gain peace of mind while platforms generate additional revenue. It’s how platforms can offset their security investments while differentiating themselves in a crowded marketplace.
Robust security measures help reduce operational expenses. When a customer loses money to fraud, the costs cascade throughout your organisation. Each fraud case requires investigation, customer support resources, and potential compensation. If your platform processes thousands of transactions daily, even a small increase in fraud incidents can overwhelm your team and drive up operational costs.
Good security investments reduce the daily operational burden of managing fraud cases, free up resources for growth initiatives, and minimise the regulatory and compliance risks that come with security incidents. By preventing problems before they occur, you create a more efficient, scalable operation that can focus on innovation rather than damage control.
The benefits of powerful security are such that they can become a serious competitive advantage. The biggest crypto companies in the world already understand this. Binance's Secure Asset Fund for Users (SAFU) allocates 10% of their trading fees to protect customer assets, with the fund being worth over $1 billion in 2024. This significant financial commitment demonstrates that Binance sees security not as a cost, but as a fundamental component of their value proposition.
In general, the ROI of robust security extends across every aspect of your business:
By implementing comprehensive security measures, you create the foundation for sustainable growth in an industry where trust remains the ultimate currency. With CoinCover's industry-leading protection technology, you can offer your customers the confidence they need while turning security into a strategic advantage. In our next and final post, we'll explore practical steps to strengthen your platform's security.
Missed earlier posts? Start here to understand the stakes.
*Lourie, Ben and Nekrasov, Alexander and Truong, Phong and Zhu, Chenqi, Crypto Fraud and Investing Behavior (November 30, 2023). Available at SSRN: https://ssrn.com/abstract=4650849 or http://dx.doi.org/10.2139/ssrn.4650849