If there’s one feature of cryptocurrencies that you’ll hear time and time again, it’s that they’re secure. With their decentralised nature and blockchain hosting, the security should arguably be some of the best that the financial industry has ever seen. Could there be more to cryptocurrency security, however? Here, we’re exploring exactly that.
How Secure Are They?
When it comes to cryptocurrencies, there’s no denying that they do hold some level of security above typical financial processes. With blockchain technology meaning that any and all transactions are transparent but anonymous, it’s no wonder so many people that shop online are drawn towards these cryptocurrencies and in particular Bitcoin.
As a result, there has been a recent surge of popularity and as a result, new markets across the globe are beginning to gain access to some of the most advanced trading platforms and exchanges on the market. Numerous European trading giants have begun to expand to markets in the US, with zcash being a prime example of an evolving cryptocurrency that is in demand for around the world.
However, despite the growing popularity, there is, of course, increasing speculation around whether cryptocurrencies are truly as secure as their developers make them out to be. While they’re supposed to be effectively unhackable, this isn’t always the case, as we’ve seen before with the Mt. Gox hack and theft of 850,000 Bitcoin and an unfortunate number of other huge losses across the industry.
What Improvements Could Be Made?
With this in mind, is there a way we can improve the overall security of cryptocurrencies? We say yes. From the wallets users store their cryptocurrencies in, to the security any one trading platform or exchange, here are a few ways security could be improved:
Improving the security of cryptocurrency wallets is an ideal way to ensure that all coins are kept safe against potential hacks, fraud or theft. While most wallets are secure by nature considering their private and public key requirements, there are ways that users can further protect their wallets.
By opting for wallets that provide key encryption, to separating your funds into general storage and ‘everyday use’, you can prevent the loss of your entire fund in the unlikely event that you become subject to theft. Back up your wallet on a hard drive or USB and, where possible, be wise with the WiFi systems that you’re using – you’ll want safe, secure and trustworthy connections before you go and spend any of your coins.
The cryptocurrency exchanges themselves have a lot to answer for in the way of security, as this tends to be the biggest downfall of any cryptocurrency transaction. While Bitcoins were supposed to hold the solution to risky transactions and prevent hacking, the unfortunate truth was that these aren’t completely a thing of the past. However, exchanges can take additional security measures to ensure that their daily activity continues without these risks.
Through setting up multi-signature security – though this needs to be done alongside other security measures – introducing additional keys and even decentralise the exchanges entirely. This will ensure that traders have access to their funds and the chance to withdraw at any time without the exchange holding any of their coins as a third party.
Discussion around regulation, security and the volatility of some cryptocurrencies is consistently ongoing and coming to a set answer isn’t necessarily the most simple of processes. However, exchanges and wallet providers alike are working to improve their business activity and the security of their offerings each and every day. Whether security improves in the future is a case of watching the industry and ensuring you choose the most secure opportunities possible.