There are already numerous companies in the market utilizing blockchain technology to varying degrees, allowing customers to decide how much, how, and where to transfer their funds. The probability of successfully hacking into a cryptocurrency exchange is low. However, customer and investor concerns do not arise without reason; there have been numerous breaches and cyberattacks in the blockchain sector.
Over the years, cryptocurrencies have been plagued by various myths regarding their security shortcomings, often portrayed as tools exploited by cybercriminals. In one network that offers financial services based on blockchain technology and crypto assets, hackers discovered a vulnerability in the code responsible for the entire protocol. This raises a fundamental question: Are blockchain funds safe? The answer is yes, but the technology itself remains somewhat perplexing for the average consumer. The decentralized nature of cryptocurrencies ensures a high level of security, as they are not issued by any central authority and employ cryptography to safeguard data. Consequently, they can be transferred securely, rendering them virtually impossible to duplicate or counterfeit, in contrast to traditional banknotes.
Cryptocurrency transactions are stored on a blockchain, a decentralized infrastructure described as a distributed ledger, secured by the collective computing power of connected computers and devices in the network. To gain control of the blockchain network, an individual would need to commandeer 51 percent of the total computing power. Only then could their requests and commands be accepted and given priority. Such a hacker could, for instance, attempt to duplicate digital coins and alter transactions. However, carrying out such an attack is essentially impossible due to its astronomical potential cost. Acquiring the necessary equipment and seizing control of the majority of blockchain networks, such as Bitcoin or Ethereum, is unfeasible, as it would require overtaking the existing machinery, including the so-called miners and computers responsible for processing transactions. These components are dispersed across the globe and are highly costly.
The primary vulnerability lies with users, as they are more susceptible to manipulation than the robust custodian—the crypto exchange. In many cases, users themselves unwittingly engage in actions that ultimately lead to losses. The security of funds encompasses various aspects, including sociological, legal, IT, physical, natural, and terrorist threats. Surprisingly, the majority of fraud victims are individuals who either fell victim to scammers or unknowingly allowed malware to infect their computers. Blockchain transactions are secure, in part, due to their transparency. They offer anyone the ability to trace the origin of payment and monitor how the transaction is processed.
For instance, if funds were to disappear from an exchange, often the information provided by the institution’s owners suggests that it wasn’t a security issue with the platform itself but a deliberate act by those running it. This, once again, points to a failure of the human factor. Such incidents cast a shadow over the entire industry, but in the long term, they could serve as a catalyst for developing regulatory solutions. Many users are not well-versed in the concept of private keys and wallets. They invest in cryptocurrencies primarily because they’ve heard about the potential for short-term gains. Even if we advise them to move their long-term holdings to their own wallets, they may not know how to do so. What’s needed is a comprehensive education campaign on this topic.
The question arises: „Should the industry be regulated by a governmental authority?” This question becomes more complex as the idea of decentralization gains popularity. The future likely involves industry self-regulation, with the adoption of best practices and responsibilities. While we’re often surrounded by the notion that technology should support human decision-making, it’s also possible for humans to support existing technology. How? Imagine a transactional currency that safeguards against inadvertent mistakes. A currency that introduces an additional layer of security by delegating control to another person, a professional who checks the accuracy of transaction addresses, ensures transactions occur on the correct blockchain, prevents excessive fees, and protects against fraud. Could such a service be offered only to premium accounts for six-figure transactions, or could the threshold for access be lower?
Employees of reputable cryptocurrency exchanges never initiate contact with users to encourage investment or interfere with customer activities. Always exercise caution when accessing websites, resist promises of instant profits, and enable two-step login authentication. Never send funds to untrusted individuals or entities and avoid sharing login credentials. However, can a set of tips significantly improve awareness and security?
What’s truly needed are safeguards and regulations that increase transparency and reduce risk. Here, the collaboration of dedicated professionals with appropriate technology can help. This security would enable transaction reversals if errors occur. While there are concerns in the industry that regulation might undermine the original idea behind Bitcoin, introducing a currency that secures transactions aligns with legal regulation. The decision to hedge transactions is akin to the mechanism used by insurance companies. We subscribe to protect transactions. What should be the cost of such a mechanism? It would likely reflect the expense of implementing and popularizing such a solution, distributed across the number of users. As the service becomes more popular, its price could decrease.
If we lack the necessary knowledge or are unable to use decentralized cryptocurrency exchange solutions, we can purchase crypto assets on centralized platforms or popular exchanges. When buying cryptocurrencies, it’s safer to use centralized services operated by organizations with the required financial licenses and government regulations. A dedicated transaction security solution could be adopted by institutions and companies as a confirmation that all security protocols have been met. Similar to how a smart contract executes without regard to conditions, a transaction could require mandatory security checks, without which it wouldn’t proceed. One could even incorporate the need for confirmation into a transaction’s smart contract, with non-confirmation triggering a return.
The desire for an alternative currency source, fueled by concerns about privacy and diminishing trust in governments and banks, might lead to the emergence of new Bitcoin-like currency, the original blockchain-based cryptocurrency. Such a coin might represents a technological breakthrough, enabling reversible transactions and the possibility of transaction insurance. Currently, such a mechanism may sound utopian.
