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Innovations in Bitcoin Security

Basics of Cryptocurrency
Last updated October 21, 2020
Estimated Reading Time:
6 minutes, 48 seconds

During the remote-work boom of recent months, the world of cryptocurrency has become increasingly fraught with hackers and cyberattacks. Fortunately, Bitcoin security innovations are proving they can rise to the occasion. These startups and tech processes are reinventing security for the safety of the world’s data at a time when it is most vulnerable.

The emergence of the pandemic brought with it massive security concerns in the form of increased access points from remote workers, among widespread uncertainty and financial losses. Millions went unemployed. The stock market plummeted.

In the chaos, cyber threats increased. Among them, cryptocurrency safety has been called into question. Fortunately, however, new Bitcoin protections are arriving all the time through innovative technology.

We explore these innovations in Bitcoin security to help you understand how your data is and can be kept safe.

The Threats

The Threats

Cryptocurrencies like Bitcoin operate on decentralized networks known as blockchains. These systems have historically been more secure than traditional private networks because of the security they offered through cryptographic linking. However, blockchains have their own host of security issues.

Security threats to blockchain systems like those on which Bitcoin operates include the following types of attacks:

  • 51% — This method of attack is highly unlikely but possible among crypto startups. It requires that hackers take control of over 51% of a blockchain’s computing power, thus enabling them to control transactions at will and commit fraud such as double-spending.
  • Sybil — Sybil attacks involve hackers creating multiple identities and duplicate networks to confuse and overwhelm a blockchain system.
  • Phishing — Common anywhere private information exists, phishing presents a threat to Bitcoin security where scammers send phishing emails with malicious links to owners of a crypto wallet. When the user clicks the link, the scammer can potentially break into the wallet or computer system for malicious purposes.

Among these threats, phishing may present the most dangerous risk to Bitcoin security. As COVID-19 has created a culture of remote work, hackers are doubling down on their attempts to socially engineer methods of Bitcoin thievery.

The theft of personal information allows a hacker to access an account without the proper authorization. This can leave a wallet vulnerable to issues like double spending, in which a hacker makes a receiver believe a transaction has gone through when it has not.

These vulnerabilities put the value of Bitcoin at risk, compromising the financial security of Bitcoin holders. Luckily, innovations in Bitcoin security are happening all the time.

The Innovations

The Innovations

When blockchain systems first began, some professed the new technology to be “unhackable.” Still, some companies, such as a video game developer in South Korea, are making these claims despite the harsh reality. Since 2011, over $11 billion have been lost in cryptocurrency hacks. Fortunately, however, methods of protecting the integrity of blockchain systems are being researched and funded all the time by a variety of institutions.

Among these qualities, protectors are what is known as the white unicorns of the Bitcoin cybersecurity world. These are independent startups, working to achieve blockchain security. With companies like these alongside innovations in average consumer protections and large AI-backed corporate security developments, Bitcoin is getting safer all the time.

Here’s what you should know.

White Unicorns

Startups are entering the field all the time, bringing value and added safety to Bitcoin usage. Many of these white unicorns are worth an estimated $1 billion apiece, with growing worth facing the cybersecurity concerns of a pandemic world.

These startups are instrumental in offering the training, awareness, and technology needed to combat the risks of phishing and malware in a tech-reliant workplace. While software is a common element involved in these solutions, new approaches to training and data analytics alone can be enough for effective cybersecurity approaches.

Proofpoint is one example of a unicorn startup innovating for tech solutions. As they merged with Wombat PhishAlarm, Proofpoint was able to offer simulated phishing training based on real attacks, employee awareness of what to do in the event of an attack, and active systems for quarantining and preventing phishing attempts.

Cybersecurity prevention companies like these are the front lines in Bitcoin security innovations, developing real-world safety applications to new problems that arise.

Authentication and Password Protections

Just like with any other tech, safety solutions are only as effective as they are usable. Consumer-friendly authentication brings that usability to the realm of Bitcoin, offering multifactor authentication and password protections that are invaluable in the fight against cybercrime.

Multifactor authentication is as simple as it is effective. In fact, Microsoft reported that of the security compromises in accounts they track, 99.9% did not make use of multifactor authentication. All it takes is a simple check from a registered phone or email account to prevent potential double-spending and Bitcoin theft.

With authentication and other forms of mobile payment security such as tokenization and encryption methods, a significant portion of cryptocurrency fraud can be reduced—even when making transactions from a smartphone. If you’re going to trade in Bitcoin, ensure your crypto wallet is protected by authentication and password protection measures.

Artificial Intelligence

Artificial intelligence, since its conception, has been sought out as a method for creating foolproof security measures within all kinds of digital systems. For cryptocurrencies like Bitcoin, AI offers the same.

While no cybersecurity system can ever claim perfection, those powered by AI offer greater levels of threat protection than many others. Artificial intelligence and machine learning processes in combination act to model fraudulent activity against attempted access, checking databases of illicit activity for similar patterns.

This acts to catch would-be phishing and malware attempts with speed and volume that no human could be capable of. As the demand for everything from instant wireless connectivity everywhere to online notarization for transaction processing in the pandemic landscape, the need for intelligent cybersecurity systems is exceptional. AI can register all kinds of data access to better protect blockchain systems. In turn, this helps keep your Bitcoin transactions safe and your data private.

In conjunction with blockchain, AI offers the ability to comprehensively scan for fraud and improper data in a database at all times. Namache AI, for example, utilizes AI alongside supply chain information to monitor and flag any potential fraudulent activity for enhanced safety. As Technologies like this emerge across industries, the ability for companies to more safely move products and protect your data means savings for everyone.

However, there is still ground to cover when it comes to Bitcoin security.

The Ground to Cover

The Ground to Cover

While in most cases Bitcoin offers consumers privacy and security, these two items aren’t always guaranteed. Issues arise, as to be expected with any system. In the case of Bitcoin, this means double spending risks as well as the occasional traceable transaction.

The kinks are still being worked out of blockchains and cryptocurrencies like Bitcoin. This results in issues like the Etherium Classic blockchain attack that cost 54,200 ETC. In this instance, a 51% attack was used to reverse transactions so that the user could flee with funds. Without security systems in place against Bitcoin issues like 51% attacks, the system will never be truly safe.

Additionally, the historical use and institutional lack of trust of cryptocurrency systems have led to the monitoring of the systems. In turn, they are not entirely confidential. Some cybersecurity companies are taking it upon themselves to monitor transactions as a method of better promoting client security. However, this does come with privacy concerns.

Effective Bitcoin security solutions will integrate the best of both worlds, maximizing the privacy and security that Bitcoin offers while at the same time keeping unauthorized and criminal use at an absolute minimum.

Final Thoughts

Itself an incredible innovation in digital transaction security, Bitcoin has rightly earned its place as a crypto giant. As our society comes to rely more heavily on decentralized digital currencies in a global and remotely working marketplace, innovations in cryptocurrency transaction security are more than welcome.

Despite the threats that linger in the cryptocurrency world, innovations in Bitcoin security such as those offered by emergent startups, authentication factors for the average user, and AI systems for preventing fraud are helping to keep your private data safe. Though there is still plenty of ground to cover, the future of Bitcoin looks bright.

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