How to improve cryptocurrency security

The world of cryptocurrency is always evolving — and quite fast at that. From the humble beginnings in 2009, with the introduction of the world’s first cryptocurrency Bitcoin, more than 1500 different kinds of cryptocurrency tokens are now in circulation. Some come and go, others are here to stay. The ones that stay contribute with something of value to the cryptocurrency community and are in competition with existing tokens. As an example of this, consider Universa versus Bitcoin. Bitcoin was heralded as the future of financial transactions because of the low cost, fast speed, and secure network. However, newer systems like Universa are 100 times cheaper than Bitcoin, and 1000 times faster.

Cryptocurrencies as a whole are definitely not going anywhere and are already having a huge impact on the global economy. Still, skeptics all around the world are doubting the sustainability of cryptocurrencies, and believe it is just a fad that will blow over. This kind of skepticism is nothing new, however. A few decades ago, when the Internet became a mainstream technology, Nicholas Negroponte argued that the books would mainly be sourced from the Internet in the future. Back then, journalists of all stripes mocked him for his silly prediction. Fast forward to the present day, and Kindle books are now the norm. Similarly, doubters of cryptocurrencies will likely be proved wrong.

In order for cryptocurrencies to become mainstream, however, there are a few kinks that need to ironed out. These kinds mainly relate to security.

Password recovery

One of the main benefits of cryptocurrencies is that the financial transactions are kept on a decentralized digital ledger — the blockchain. This makes the system much more secure, as data is not stored in one specific place at any given time. However, this very same security measure can make life difficult for people who forget or lose their password. According to a study by Chainalysis, up to 3.7 million Bitcoin tokens have been lost due to the owners being unable to access their wallets after losing their password. This translates to $33.2 billion worth of lost Bitcoin tokens. This is not counting the other cryptocurrency tokens that have been lost in a similar manner. This issue needs to be sorted out by the cryptocurrency community in order to prevent this from happening in the future.

Fraud

Another benefit of cryptocurrencies is that of anonymity. Many traders enjoy this benefit, but it can also increase the risk of fraud. Traditional financial institutions are very vigilant when it comes to protecting their clients against fraud. Some of the measures they take to reduce the risk of fraud are to monitor their clients’ transaction patterns. If something seems suspicious, the client is alerted. In the world of cryptocurrency, however, there is no such monitoring going on. This has led to cryptocurrency traders being scammed out of $1.36 billion worth of cryptocurrency tokens in January and February this year.

Hacking

Everyone who has followed cryptocurrency news will know that a lot of prominent cryptocurrency exchanges have been hacked. Not only can exchanges be hacked, but wallets themselves can be hacked as well. Whilst fraud constitutes 30% of all cryptocurrency scams, hacking accounts for 22%. Hopefully, once the banks begin to embrace cryptocurrency on a larger scale, their security systems will prevent this from happening in the future.

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