Cryptocurrency and blockchain have already taken the tech world by storm and are, according to experts, only going to increase in value, usefulness, and significance over time. Although initially designed to make money transactions easier, more secure, and faster, this financial technology, referred to as fintech for short, now has several other uses that go beyond transactions, financial institutions, and currencies. Today, there are several different ways cryptocurrency and blockchain contribute to security technology, mostly by keeping information safe and hidden from prying eyes.
Even though these services have not been fully integrated into our infrastructure, it might actually take at least a few years, if not several decades until this happens, many institutions are already integrating them into their business, calling them the future of trusted transactions.
But why exactly are these technologies used in cybersecurity and why are they increasing in popularity with each passing year?
Well, if you are interested in learning more, here are some things you should know about cryptocurrencies and their contributions to cybersecurity.
What is Cryptocurrency?
The simplest explanation would be that it is a type of digital asset, specifically designed to serve as an extremely secure exchange medium with the help of cryptography. These financial assets were made with the idea of getting rid of government control, allowing people to securely complete transactions, eliminating issues with the exchange rates, and much more.
If they become fully accepted in the future, cryptocurrencies could potentially eliminate the need for any financial transfer services and ultimately, the necessity for banks.
In this context, crypto has the meaning of anonymous, meaning that clients are offered full anonymity when completing any kind of transaction or financial transfer. But how?
Well, it is partially thanks to a database known as blockchain on which every cryptocurrency is stored.
What is Blockchain?
Essentially and in the easiest of terms, it is a new type of database – an organized data or information collection. One that is decentralized, meaning that there is a network of interconnected servers that offer information to individuals but without central storage.
Pieces of digital transaction information such as the date, time, and cost are stored in blocks which are then added to a chain – a public database. These blocks are distinguished from one another thanks to hashes (unique codes) and they also contain the participant’s digital signature as opposed to a real name.
Whenever new information is added, a new block is created and stored in the chain. Although any individual sharing the network can see the contents of these blocks since they are fully transparent, only the owner has the ability to edit them.
As mentioned above, due to their increased security and fidelity, many companies, especially in the financial industry are starting to implement these systems into their networks. This has opened doors to new types of businesses such as Block 8 that provide blockchain technology development services from product management and software development to infrastructure and security.
What Cryptography Methods are Used?
Before mentioning what methods are used in cryptocurrencies, let’s take a look at how it generally works. To put it simply, this technique involves sending encrypted messages between two or more individuals. Before the information is sent it is encrypted – hidden by using a specific algorithm and key which the recipient must decrypt in order to read the original message.
The encryption and decryption keys are only familiar to the authorized readers, meaning that reading the originals is impossible by anyone else.
Many new cryptocurrencies utilize three methods to ensure maximum security and anonymity. These include symmetric and asymmetric encryption and the before mentioned hashing. The symmetric entails using a key to code and decode data between recipients, for example, using numbers to represent letters. The asymmetric kind uses a public key that can be openly distributed and a private one which is only known by the owner.
All three methods are accompanied by a digital signature that enables participants to easily prove their identities.
So how exactly is this beneficial to the cybersecurity sector?
Besides having to have the encryption key to be able to read data, transferring funds and other assets are done directly between two individuals without needing a central authority or third party. This adds an extra layer of security since it is harder to intercept any data and possibly steal it in the process.
Moreover, users who have access to a single blockchain have their copy of it on their device. This makes it harder for hackers to alter any information since they would need to do it not only on the original but on every single copy that exists, as well as ones that are created in the future.
There is no need to reveal any personal information such as one’s name or address since all verification is done using one’s digital signature or username. The main aspects of cryptocurrencies include concealment and anonymity, so clients also dictate to what level their activities are shown on the network.
Since data is scattered throughout blockchains, subsequently servers, and is not collected in central storage, it prevents data and information leaks and helps decrease the chances of cyber espionage too.
No More Passwords
Authentication can now be done by using a client’s unique digital signature, eliminating the need for human involvement in the verification process. Since there is no need for a third-party individual to enter any database to complete this authentication, it drastically decreases the chances of possible cyberattacks.
Protection of Other Transaction Types
Besides finance and banking, cryptocurrencies and blockchain can also be used in other industries as well and offer the same protection too. Some of these include healthcare, defense and military, governments, the Internet of Things (IoT), and many more.
Major tech companies are already heavily investing in these services which will, according to experts, be worth billions of dollars in the next 4 to 5 years. This should not come as a surprise since they drastically optimize operations and offer security unlike any other we have seen in the digital world.
It will be interesting to see what will happen in the next few years, but there is no doubt that these technologies are our future.