Cryptocurrency has taken the world by storm. What was once labelled an outcast, or drug money is now a mainstream investment and payment currency. Many cryptocurrencies such as Bitcoin can be used to purchase goods and services, further than that you can use these cryptocurrencies to transact and transfer money abroad in a more secure way. With many crypto exchanges allowing users to transact easily and at low costs.
While this new era of finance may be on the rise, it begs the questions of cybersecurity in the crypto world. This can be seen by many users asking if the system is secure as it is not regulated by an authority as banks are. While this decentralized system may save on fees, is blockchain secure?
What is Blockchain?
Cryptocurrencies need to run on a system, almost like a banking system. However, unlike a bank, cryptocurrency systems are decentralized, meaning they are not stored in one location but rather in multiple locations across the world. This decentralized system is known as Blockchain.
The name comes through the process of storing small blocks of data in multiple locations, this means if one server is destroyed, nothing is lost.
Blockchain also runs on a public ledger meaning that every transaction is trackable and can be seen on the public ledger. No longer can thieves hide through red tape as the public ledger stores a solid and indestructible record of all transactions.
Is Blockchain Secure?
Blockchain is not completely impenetrable or immune to hacking, but due to its decentralized nature, it adds multiple extra layers of protection.
Another factor that helps with the security of Blockchain systems, predominantly in big networks like Bitcoin or Ethereum, is more checks and calls in the systems. When someone transacts with a cryptocurrency that uses blockchain, the system will send out a call to for the transaction that it wants to complete with the security token and block token. These need to be verified against the public ledger before the transaction can take place. If these cannot be verified, the transaction won’t be able to take place. This makes it very difficult to make fraudulent transactions on the Blockchain system.
Miners play a vital role in ensuring the security of the system. A miner is a processing computer that performs the tasks need to store and perform the transactions. The miners receive coins in exchange for their work. The more miners there are the better as the system becomes more decentralized and therefore more secure.
While cybersecurity is something we all need to consider in the online world, Blockchain is a secure system. While it is important to check each currency to see what system they use, your major cryptocurrencies have been built on large decentralized Blockchain systems, which while not impenetrable are fairly secure when used with a secure wallet and exchange.