Cryptocurrencies – Financial Systems With The Highest Cybersecurity Standards On The Planet
Cybercrime is increasingly becoming a threat from year to year and its yearly losses have been steadily rising during the past few years. As more and more people are relying on technology and the internet to store wealth and trade (forex, saving accounts, cryptocurrencies, bonds, stock, commodities…etc), cyber-security has become a big concern for individuals, companies and governments. Cryptocurrencies offered a trustless decentralized financial infrastructure that can represent a secure platform for storing wealth and transferring value.
An Overview of the Causes Underlying Today’s Cyber-security Threats:
Most of today’s cyber-security problems emerge from a mismatch between security vulnerabilities and the strategies used in the creation and activation of solutions that counteract these vulnerabilities. We can safely point out these problems that face present cyber-security systems:
1- Internet security systems against various forms of malware are based on detection of a group of malicious code signatures within files. Accordingly, no matter how fast and effective the process of signature databases update is, some malware will be missed and security systems will eventually fail to adapt with this kind of polymorphic threats. Even minimal changes of the script of a malicious file can render its signature unrecognizable. Internet security systems that are reliant on code signatures can be replaced by other systems that also rely on the reputation of the publisher of the program, detection of malicious behavior of applications and pinpointing anomalous variations in scripting code.
2- Mechanisms and processes of accreditation security and certification systems are also responsible, at least partly, for failing to represent protective scenarios against malicious threats. Certification is a process that involves testing and assessment of a program to identify possible vulnerabilities. Accreditation represents an executive system that involves approval of the risks, if there were any, identified during the certification process. Accordingly, the overall accuracy of the accreditation system is highly reliant on the soundness of the certification process.
3- The standards set by the IT security echosystem are continuously proving that they are inadequate and inefficient in dealing with the huge amount of information, mainly due to the fact that it is hard to practically implement them without deploying a high level of automation of management of application standards. The standards don’t also get updated quickly enough to cope with emerging cyber threats.
Decentralized Cryptocurrencies And Their Level of Security:
Decentralized cryptocurrencies are increasingly proving to the world how they can provide secure means for storing wealth and transferring value between individuals. Fiat currencies are highly dependent on the Central Banks that issue them, which means that they are dependent on trust in centralized financial institutions. Cryptocurrencies have taken the financial ecosystem to a new level of trustless decentralized currencies, that are innately based on encryption using specific mathematical equations, that are controlled by all users rather than by a central institution. Bitcoin, the first ever decentralized cryptocurrency, has ignited a paradigm shift that resembles the advent of the internet, mainly due to a new concept of “trustless” economies. Fiat currencies conventionally rely on third parties, or middlemen, who “confirm” or “guarantee” the security of financial transactions.
A fiat financial system is dependent on private “ledgers”, or databases, that are managed by the trusted financial institution, e.g. a bank. These databases, whether physical or hosted on database servers, can be lost due to disasters, hacking incidences, theft…etc. This is a major flaw that doesn’t exist with cryptocurrencies, as the records of balances and transactions are recorded on a public ledger that consists of hundreds of thousands of nodes across the network, so there is no central server that could be hacked to undermine the records.
The security of cryptocurrencies is hack-proof, thanks to private key cryptography. A transaction is initiated using the private key of the owner of the coins, which is used to produce a digital signature that is broadcast to the network to check its validity, confirm it, include it in a block and then record it onto the public ledger. The private key can never be guessed or counterfeited. The blockchain protocol guarantees optimal transparency as every transaction can be visible to anyone across the network.
The fiat economy has been facing rough times during the past few years, while on the other hand, the cryptocurrency ecosystem has been steadily thriving. The blockchain technology is offering humanity a new way to store wealth and transfer value that is not only irrespective of any central authority, but also much more secure than the current global fiat economic system.