The importance of security in crypto currencies.
How to keep our money safe? Crypto-currencies and IT security, two things that should definitely go together in every way. Find out why it’s so important!
Crypto currencies arise from the need for a payment method that is transparent, secure, independent; and not subject to political influence. With the advance of technology and the deployment of the economy focused on new areas such as electronic commerce; they have demanded a payment method that was reliable and that could be simple that did not require a change; but that was international, so crypto currencies were created, being bitcoin the first of a wide range of crypto currencies that are currently used worldwide. In this article we will see what crypto-currencies are about, how they work, the threats and vulnerabilities; and how to secure these bitcoins.
What do crypto-currencies consist of?
Crypto-currencies are digital currencies that are used as a method of exchange; which uses cryptography to verify and ensure that transactions are secure; as well as to regulate the creation of new crypto-currencies. There are thousands of crypto currencies; however, the best known and currently most valuable is the bitcoin.
As for the history of crypto-currencies, when it started in the technological boom in the 90’s; there were many attempts to create a digital currency that would be able to fulfill the functions of real money in the web; however, these were a failure mostly due to fraud and financial problems. Then in early 2009 a group of programmers presented for the first time the bitcoin; in which they explained that its purpose was a decentralized virtual currency, that is to say that there was no authority managing the currency.
One of the main limitations of these crypto-currencies was that it was almost impossible to get merchants to accept crypto-currency for payment of their products or services, so there was little demand. Nowadays it is different, thousands of electronic stores accept this type of payments and there are some physical stores that also accept crypto currencies as a payment method.
How do crypto-currencies work?
Now, the way crypto currencies work is that after a transaction is made, they are sent from the “wallets” of both parties to the transaction (people involved) right at the moment where the public codes are found. These codes are intertwined with various cryptographic passwords that have been created by the users who ensure that the transactions are actually carried out and the money reaches the digital wallet of the other person involved. After this, the transaction is recorded in a public book known as a “Blockchain“.
Threats in crypto-currencies.
As far as the threats surrounding crypto-currency are concerned, it is easy to imagine that theft is the main threat. Theft itself is an act that has been with us since the beginning of civilizations, and it can be adapted to any era or environment, and in this case the digital world is no exception. Over the years and the increasing popularity of bitcoins and other crypto currencies, they have attracted the attention of hackers who have increased the rates of crime and digital fraud in the crypto currency environment.
The decentralization feature of crypto-currencies is also a disadvantage because it is not subject to regularization. One example was the news that was released in May 2019 in which the Binance crypto currency exchange suffered a theft of 7000 bitcoins, which at that time had a value equivalent to 40.6 million dollars. The attack was carried out through a combination of techniques such as phishing and computer malware. This led Binance to suspend deposits and withdrawals from its platform for a week in order to carry out new security measures and investigate the incident.
There are many threats that can be found in the field of cryptomonies, in this case we can highlight cryptojacking, as one of these. This consists of using the resources of a difficult device to generate crypto-currencies without the owner’s consent. This can be done with the help of a malicious program installed on the computer.
This has been the subject of multiple debates and controversies; because whether cryptojacking tools are considered malicious or not; since they do not actually demonstrate a danger to the operation of computers and can work without using the computer’s hard disk storage; so from that point of view it cannot be considered malicious; however, it is categorized as annoying software and its exercise can be equally punished as any other hacker.
In the same way; we can observe multiple vulnerabilities in the crypto-currency environment, including vulnerabilities in clients and fictitious clients. To better understand this vulnerability it is necessary to understand what wallets are in the context of crypto-currency storage security; and these are divided into:
- “Cold” portfolio: this stores private data and stores private account data in a computer using large amounts of storage due to the constant growth of the blockchain.
- “Hot” wallet: in this case also private account data is stored; however, the blockchain does not download the wallet and must use third parties during the operations that are carried out.
- Online wallet: here all user data is stored, it represents an internet account that resembles electronic payment accounts; in this case the user can access it from anywhere, as long as there is internet.
After understanding the types of wallets that exist; we can understand the latent concern that the owners of these wallets have; that guaranteeing the security of the data is an arduous task to counteract the theft of the funds. Hackers can find different vulnerabilities in the main software that is responsible for making crypto-currencies secure, i.e. cryptographic software. They do this by exploiting security holes and carrying out actions that give criminals an advantage.
How can we keep our crypto currencies safe?
One of the ways to keep crypto-currencies safely stored is through cold storage; which is normally recommended when working constantly with moderate amounts of crypto-currencies. This method represents an adequate level of security; because it works with two types of wallets, the first one is a quick or flash start and the second one will be placed in a machine. This reduces the risk of theft and piracy; because the storage is located on an off-line platform, i.e. not connected to an Internet network; which protects the wallet from attacks and reduces vulnerabilities.
The way in which this is done is through the use of public keys and private keys, the private keys are used by the owners of the bitcoins as they are a unique string of characters needed to access the account where the funds are stored, while the public key is even more similar to a user name, this helps to identify the destination of the funds and both parties involved in the transaction must share their public keys so the blockchain can verify the existence of the seller’s funds and the transaction can take place.
After the funds have been sent to the buyer, the buyer can only access them with the private key. The problem with these transactions is that they are made online and this allows criminals to track networks and access the buyer’s private keys. Therefore, cold storage solves this problem since the transaction carried out with the private key is done offline, making it impossible to track the private key and therefore the attacks.
After analyzing this information, we can conclude that there are many threats and vulnerabilities surrounding transactions carried out with crypto-currencies. These represent an easy target as, as they are not centralized, they have no backup, making it impossible to recover funds if they are stolen. It is therefore necessary to consider different methods to keep our digital funds safe and away from cyber-criminals.