As blockchain technology is progressing day by day, the cryptocurrency craze is also growing. While some people look at cryptocurrency as a good investment sector, others think that crypto is the banking sector’s future. If implied correctly, bitcoin can make paper money obsolete. With the numerous benefits that it offers the users, cryptocurrency has become a significant cause of concern for traditional financial institutions.
However, when a new promising technology comes into the market, some concerns also come with it. In the case of cryptocurrencies, security threats are the most critical questions associated with them. Let’s explore some of the challenges that cryptocurrencies face.
Wallet Attacks
‘Wallet’ is a digital software where cryptocurrencies owned by general users are stored. Wallets come in many forms like mobile apps, desktop software or online software. The easiest to hack is the online wallets. Hackers can use high-power computers and self-evolving malware to penetrate online wallets.
Owing to the security threats online wallets face, storing cryptocurrencies in offline wallets and encrypted mediums is considered the safest. Even if the hackers get hold of your private key, it will not be possible for them to steal from an offline wallet.
Timejacking
Timejacking is not as significant a threat as a wallet attack because hackers will need to break into the blockchain system to execute time jacking. However, executing this attack is possible if a hacker successfully broadcasts fraud timestamps while linking a transaction to a node. A user might face double-spending due to this kind of attack. Miners can lose their mining data if a time jacker interferes with their system.
51% attack
‘51% attacks’ occur when a single person or group takes control of more than 50% of mining computers. Although this may seem impossible as more and more miners are emerging with the growth of cryptocurrencies, if it does become a reality, the said group can manipulate the whole system for their benefit.
A group with over 50% mining processing power can eliminate, transform or undo transactions. They can even prevent other miners from accessing authentic blocks for their benefit. Those with high computational power could misuse it and manipulate transactions through mining invalid blocks or make users double-spend. Gradually, the stand-alone miners will go away and give them a monopoly over the market.
That is the reason why the blockchain system needs to be spread out and decentralized. Joining blockchain communities like Yuan Pay Group can help the general public be aware of these problems.
Selfish Mining
Selfish mining or block discarding undercuts Bitcoin forking to obtain an unfair reward, affecting honest miners and pools. It enables miners to get more money than their mining power can earn. Therefore, real miners are discouraged from engaging in mining. When that happens, the cost of transactions increases and people start to lose interest in cryptocurrencies.
DDoS Attack
Online platforms related to cryptocurrencies can also get attacked. Because most players use some online platform to manage their transactions, these attacks can cripple the majority of the crypto community. Sadly, this happened in the past when an exchange point of bitcoin was hacked and looted. This incident led to a massive loss of the value of cryptocurrencies.
Distributed Denial of Service attack is known as a DDoS attack. It occurs when hackers overload a cryptocurrency exchange with their programming skills. Although they fail to steal money from this kind of attack, they leave an exchange paralyzed for a significant amount of time. Hackers usually threaten crypto exchanges with DDoS attacks to extract money or to distract them from the actual hacking.
Conclusion
You must be feeling a little unsure about investing in cryptocurrency now that you know about the security risks. But rest assured, all of these threats are towards online currency platforms. Blockchain technology is still pretty secured, and its security is improving day by day. There remain several new cryptocurrencies in the market that promise better safety and immunity against these attacks.