Bitcoin’s Security Challenges

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Like any type of data, when it is not actively used, it is most at risk. Bitcoin is no different, according to Reza Rahimi, product manager with WinMagic, who points out that no matter where your wallet is stored, it still counts as data at rest, which makes it an easier target. Rahimi recommended using strong encryption, as this will prevent unauthorized access and theft of your Bitcoins. He also suggested using reliable and trusted third-party vendors for all forms of wallets, adding:

But remember it is not good practice to keep large amounts of Bitcoins in an easily accessible manner such as a mobile wallet. Instead, keep small amounts on a computer, mobile or online for everyday use and the remaining part on physical media, encrypted and locked away safely. In addition to encrypting your wallet, create redundant backups of it in order to avoid data loss.

Lozhkin and his fellow Kaspersky Lab expert Stefan Tanase wrote in a SecureList blog post that Bitcoins should never be kept in online stock exchanges. Unknown and untrustworthy banks should also be avoided. It is important to remember that the transfer of Bitcoin is anonymous and the transactions are done under nicknames or pseudonyms. While there is no 100 percent guaranteed safe storage or transaction – and that is true in traditional monetary storage and transactions – the better the reputation of the bank or service, the more secure the Bitcoin will be.

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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