Bitcoin’s Security Challenges

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According to Lozhkin, the main threat surrounding Bitcoins is theft. Cyber criminals can steal Bitcoins by using malware to target Bitcoin wallets stored on a machine that's connected to the Internet. They can also hack into Bitcoin exchanges and other third-party platforms, which are lucrative, high-value targets with mostly unproven security track records.

The biggest concerns have appeared in the operation of various Bitcoin exchanges and/or storage facilities. Brandt added:

All the largest thefts of coins have taken place in these "banks" of sorts, where people keep their bitcoins until they're ready to spend them. Unfortunately, in this unregulated, kind of Wild West marketplace, there's nobody to certify that security procedures are sound for the storage and management of coins and accounts.

In a Business Insider article, Jim Edwards pointed out what makes a Bitcoin theft different from theft of traditional currency and how the security of Bitcoin also adds to the risk. It is the permanence of the transaction. Edwards wrote:

Once a Bitcoin transaction has been approved by both sides, it cannot be reversed without the permission of the recipient. So when hackers engineer the transaction, the cash is gone forever.

The crypto-currency known as Bitcoin was first introduced in 2009 in a paper published by Satoshi Nakamoto. As Kaspersky Lab described the e-currency:

Named "Bitcoin: A Peer-to-Peer Electronic Cash System," the paper defined the foundations for a distributed, de-centralized financial payment system, with no transaction fees. The Bitcoin system was implemented and people started using it. What kind of people? In the beginning, they were mostly hobbyists and mathematicians. Soon, they were joined by others – mostly ordinary people, but also cyber criminals and terrorists.

Since the introduction of Bitcoins in 2009, they have received a lot of attention: some of it good, some of it bad. Just like any other crypto-currency, they’ve been associated with numerous scams, hacks/thefts, defunct "stock exchanges," and reported losses of wallets containing massive amounts.

Kaspersky Lab’s experts explained that Bitcoin really began to hit its stride in 2013, in part because they are a secure, anonymous, way of paying for law-abiding citizens, especially for those who want to fly underneath the NSA’s surveillance radar.

Bitcoin as a currency, itself, seems to function as-advertised, according to Andrew Brandt, director of threat research at Blue Coat. The math surrounding the creation and transmission of value through the currency exchange network is scientifically sound.

As global commerce will only increase, e-currency in general, and in particular Bitcoin, could play a major role in how consumers and enterprises alike pay for goods and services. But first, it has to solve its security issues.

 

Related Topics : Unisys, Stimulus Package, Security Breaches, Symantec, Electronic Surveillance

 
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