CRYPTOCURRENCY AND ITS CYBER SECURITY SIDE

A cryptocurrency is digital asset designed to work 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 prefix crypto stands for "cryptography," which is a technology that keeps information safe and
hidden from attackers. Cryptography was used to send and receive secret messages by the Allied Forces
in World War II.
Cryptocurrency is also defined as "electronic money created with technology controlling its creation
and protecting transactions, while hiding the identities of its users." Thanks to cryptocurrency, people
no longer need to trust banks to handle their money and private information.
We don't need banks to process our transactions anymore. Instead, transactions in cryptocurrency
are processed on the blockchain. The blockchain is a shared database. It is shared because it is run by
lots of different people and companies, instead of just one company, like the banks are. This way,
nobody has power over the transactions or the cryptocurrencies involved, and you don't need to trust
one single company (like a bank) to handle your money.

Difference between cryptocurrency and blockchain & how they work together
Blockchain is the platform which brings cryptocurrencies into play. The blockchain is the technology
that is serves as the distributed ledger that forms the network. This network creates the means for
transacting, and enables transferring of value and information.
Cryptocurrencies are the tokens used within these networks to send value and pay for these
transactions. Furthermore, you can see them as tool on blockchain, in some cases serving as a resource
or utility function. Other times they are used to digitize value of an asset.
Blockchains serve as the basis technology, in which cryptocurrencies are a part of the ecosystem.
They go hand in hand, and crypto is often necessary to transact on a blockchain. But without the
blockchain, we would not have a means for these transactions to be recorded and transferred.

Key Features of Cryptocurrency

• Ownership of cryptocurrency units can be proved exclusively cryptographically.
• A cryptocurrency transaction statement can only be issued by an entity proving the current ownership
of cryptocurrency units.
• Does not require a central authority, distributed achieve consensus on its state from regulatory
bodies.

Three Main Cryptocurrency Types

Bitcoin
It is a digital currency that you can send to other people. This may be as a gift, for services or for a
product. It's just like the money we use in our bank accounts. But it's digital; it isn't physical. However,
that isn't all that makes it different. It's also decentralized, meaning it doesn't rely on a bank or third
party to handle it.

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 With Bitcoin, each transaction happens directly between users - it's called a peer-to-peer network.

This is all possible thanks to the blockchain. Bitcoin introduced blockchain technology to allow users to
send and receive Bitcoin without using a third party. Because we don't need a third party, we don't need
to identify ourselves. We can make payments without revealing who we are.

Altcoins

Majority of altcoins are just alternate versions of Bitcoin with minor changes. That's how they got

the name 'altcoins'. It's important to understand, though, that not all altcoins are just alternate versions
of Bitcoin. There are some that are very, very different to Bitcoin and have very different goals/purposes.
Some altcoins use different algorithms to Bitcoin. For example, Factom is an altcoin that uses PoS
(Proof of Stake).

Tokens (for dApps):

The third main type of cryptocurrency is a token. Compared to the other two main types of

cryptocurrency, they are completely unique as they do not have their own blockchain. They are used on
dApps (decentralized applications); these are the apps that can be built on blockchains.

The dApps are built to use smart contracts, which is why they use tokens. Their tokens don't have

to represent a physical thing like electricity or a house, though. They can instead be used to purchase

things on the dApp.

Either that or they can be used to get certain advantages - things like discounted fees and voting

fees. Tokens always have a price that they can be sold for, which is why some people buy them. Some
people buy tokens to sell them later for a higher price, instead of buying them to use them on the dApp.

Cryptocurrency Criticism :

Cryptocurrencies can be lost and then it's gone forever. Malware or data loss can cause the loss of

your cryptocurrency. Once you lose a wallet, that currency is gone forever with no way to get it back. If
someone else were to find it, they won't be able to use it either.

Some people have called cryptocurrencies pyramid schemes. One of the big criticisms is that

cryptocurrencies like Bitcoin is like a pyramid scheme or a bubble. This is based on the fact that this
type of currency is invisible and actually has no value. The only value it has is that which a person is
willing to give it.

Bitcoin is not accepted as a mainstream currency. More and more businesses are accepting Bitcoin

as a payment method, but it is a far way from being main stream. There are several criteria that it
must meet before it can become main stream. With the limit of 21 million Bitcoins, it may not even be
worth the effort.

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 National governments are cautious. The reason for the caution is the lack of centralization and
control. The system was built with the purpose of being decentralised. However, this is a criticism for
some because there is no control and it could influence financial security. It is just a bit too mysterious
to trust.

Why cryptocurrencies are vulnerable to cyber attacks and hacks

As much as crypto currencies are considered a risk as the rapidly changing values across exchanges
have shown, they are also a cyber threat. This is why it is an increasingly popular target of hackers.
Crypto-currency exchanges that trade Bitcoins and other virtual currencies that are based on this
technology have been hacked because they are not working on secure networks, experts say.
Recently, the Tokyo-based Coincheck exchange reported a $530 million loss of crypto currency due
to hacking. The Coincheck exchange has halted trading of the stolen currency, NEM and restricted
dealings in most other crypto currencies. It was the second major hacking assault on a Japanese crypto
exchange after the Mt Gox debacle in 2014.

Following security concerns surround crypto currencies:

• Poor security: While a blockchain can be secure, the exchanges that play a crucial role in increasing
the amount of crypto trading, enabling Bitcoin and other such currencies go mainstream, do not
use the same technology. South Korean exchanges reportedly get poor reviews for cyber security. If
security on the exchanges' is not secure, their currencies can be stolen. If the exchanges are to
play their intermediary role, they should be as safe as banks and strengthen their security.
• Rising hacks: According to crypto currency research firm Chainalysis, losses of bitcoin, including
stealing individuals' holdings through scams, malicious computer software known as ransom ware
and hacks, increased at least 30 times to $95 million in 2016 from at least $3 million in 2013. The
attack on Coincheck, which did not affect its holdings of bitcoin, was the second major hacking
assault on a Japanese crypto exchange after Mt Gox, the world's largest bitcoin trading exchange
before its collapse, lost hundreds of thousands of Bitcoins likely stolen through hacking. Coincheck
has apologized and promised to reimburse customers for their losses. It has pledged to comply with
a Financial Services Agency's order to determine why the losses happened, and improve its security
to prevent a recurrence.
• Identifying hackers: It's possible to trace blockchain transactions but not to identify the owners of
the 'wallets' where the crypto currencies are kept. It's the biggest weakness is that you can track
the blocks based on the records in the blocks but you cannot tell whose wallet it is. We know that
they went to hackers' wallet but if we don't know who the hackers are we cannot catch them. The
rising hacks have prompted the crypto community to seek ways to halt the hackers. South Korea's
government is trying to make crypto transactions traceable by implementing a system that links
crypto accounts to existing bank accounts that have been vetted by financial institutions. Such
efforts however will not help identify hackers if they send crypto currencies to exchanges outside
Korea that do not identify their users.
The propogation of Crypto Currency have been discussed.
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