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Student Names:
Talent Mahlangu H190409H
Owen Shumba H190718H
Panashe Chaita H190840E
Gift Tandare H190833E
Deon Chawaguta H190650Y
Eric Shumba H190161M
Tanyaradzwa Kavumbura H190204J

Degree Program: B.Tech in Information Security and Assurance

Assignment Number: One

Lecturer: Mrs Gondo

Due Date: 27 March 2020

 Security in Blockchain Cryptocurrencies
Deon Chawaguta, Gift Tandare, Talent Mahlangu, Panashe Chaita, Eric Shumba, Tanyaradzwa Kavumbura
Information Security and Assurance Department,
Harare Institute of Technology, P.O. Box BE277 Belvedere, Harare, Zimbabwe
Abstract— Blockchain cryptocurrencies have been gaining
prevalence for the last half decade and with this they present an
entirely novel means of interacting with money for both
businesses and the average consumer. In this report we discuss the
benefits and potential drawbacks of this digital currency system
from a security standpoint. We’ll mainly look at it with the
consumer or end user in mind and what it may entail for future
generations as adoption of the system increases.
Keywords— Altcoin (Alternative Digital Currencies,
Mining, Blockchain, Psuedonymity, Ledger
I. INTRODUCTION TO CRYPTOCURRENCIES
Cryptocurrencies are a form of digital assets designed to
function as a medium of exchange that uses strong
cryptography to secure financial transactions, control the
creation of additional units, and verify the transfer of assets.
The main feature of cryptocurrencies is that they are
inherently decentralized meaning no governing body dictates
the creation of new units of currency and as such the value of
cryptocurrency cannot be controlled by any single entity.
II. HOW CRYPTOCURRENCIES WORK
To understand how cryptocurrencies work we must look at
the unnderlying mechanism which causes all this to be
possible.
When one wants to make a transaction with a
cryptocurrency they following a sequence of steps.
1. They request said transaction
2. The requested transaction is broadcast to a Peer-to-Peer
network consisting of computers known as nodes
3. The Peer-to-peer network validates the transaction and
the user’s status using known algorithms
4. Once the transaction is validated the transaction is
combined with other transactions to create a new block of
data for the ledger.
5. The transaction is then complete!
III. BLOCKCHAIN AND CRYPTOCURRENCY EXPLAINED
One of the most common questions brought up within
conversations on cryptocurrency is how a currency can be
created out of nothing, and that is where the core of
blockchain technology applies to the application of
cryptocurrency.
Technically speaking the system is not built on the transfer
of physical value or any digital model of such tangible value,
instead cryptocurrencies rely on vast records of transactions
to maintain the integrity of data relating to each individual
transaction. By design, a blockchain is resistant to
modification of the data. It is "an open, distributed ledger
that can record transactions between two parties efficiently
and in a verifiable and permanent way. It operates on a
system of mutual distrust in the sense that every transaction
has to be validated by member of the aforementioned peer-
to-peer network.
This process of confirmation of transactions is critical to
cryptocurrency security since an unconfirmed transaction is
pending and can be forged. Once it is confirmed it can no
longer be altered and is irreversible, and it’s place in the
blockchain is immutable.
In the process of recording these transactions a unique
code called a hash is created and included in the block to be
added to the chain. These hash functions connect the blocks
together in a specific order.
This hash is created using a hash function which a
mathematical function which takes digital information and
produces a string of letter and numbers from it. Hash
functions generate codes of fixed length regardless of what
size the input data is, for example, a hash function generated
from the single word “Pie” will be the same length as one
created from all the works of Shakespeare combined.
Additionally any changes to the input would alter the hash
generated.
These hash functions work in such a way that to restore a
previous record one has to recalculate the next has and so on
and so on until they reach the block they want. Recalculating
all of that while not impossible would be incredibly difficult
requiring vast amounts of computing power.
IV. WHAT MAKES CRYPTOCURRENCIES SO SECURE?
Are cryptocurrencies safe? Can cryptocurrencies be
hacked? These and other questions are on the minds of
traders, investors, supporters, opponents and regulators the
world over. Bottom line is that yes, a cryptocurrency can be
hacked. Let’s face it, it’s just another technological puzzle
that is attracting the attention of technogeeks and criminals
alike; sooner or later someone will figure out how to do it. Of
course, it’s already been done. Blockchains and
cryptocurrencies are attacked every day if for no other
reason than it’s possible. The real reason though is because
blockchains represent value and money and where there is
money there is motivation.
The strength of a blockchain lies not in its ability to repel
attack because it can’t. The strength of a blockchain lies in
the redundant nature of the DLT, the distributed ledger
technology. It’s pretty easy for a black hat to hack into a
mining node and falsify a transaction. It’s hard for a black hat
to hack into every mining simultaneously and impossible to
do that and alter the enter blockchain up to that point and
believe me, that is what you’d have to do to fake a Bitcoin.
Blockchains are distributed ledgers. A ledger is a record of
transactions, a distributed ledger is one that is shared with a
community or the public in order for audit and verification.
The analogy that best sums up how a blockchain works is the
box of checks. Each check represents a transaction akin to a
Bitcoin or other altcoin exchange. As the number of
transactions and checks grows you will eventually fill a book
and then a box. The box is like a block in the blockchain. The
block is a set number of transactions that have been bundled
up and added to the chain.
Before the block can be added to the chain however it gets
distributed to all the mining nodes on the network. This is so
that they can each verify that the transactions contained
within the block are all valid. This audit means that each unit
of cryptocurrency can be traced back through the chain from
transaction to transaction to the very point it was mined. It
exists in every block from the point of its mining forward and
has been verified by the network. Each node on the network
is an independent operator and third party auditor, if even
one of them rejects a block – it is invalidated.

V. CONCLUSIONS
Cryptocurrencies while at the moment are still in their
infancy they stand to provide a wide range of Security
benefits for individuals, corporations and even institutions
such as governments. The future can only tell how far they’ll
go but they have almost infinite potential and utility.

ACKNOWLEDGMENT
We wish to acknowledge Deon and other contributors for
compiling this report.

REFERENCES
[1] https://blockgeeks.com/guides/what-is-
cryptocurrency/#What_is_cryptocurrency
[2] https://en.wikipedia.org/wiki/Cryptocurrency
[3] http://graphics.reuters.com/TECHNOLOGY-
BLOCKCHAIN/010070P11GN/index.html