From Bitcoin’s boom, to high stakes hacks – cryptocurrency, and how to secure it, has been the talk of the town. However, what most don’t realize is that a there is a sophisticated technology involved in each cryptocurrency transaction designed to secure digital currency: blockchain technology. Now, many of you may be asking – what exactly is blockchain? Let’s take a look at how this technology actually works and what the security implications may be for consumers.
What is blockchain?
According to the recent McAfee Blockchain Threat Report, “a blockchain is a series of records or transactions, collected together in a block that defines a portion of a ledger. The ledger is distributed among peers, who use it as a trusted authority in which records are valid. Each block in the ledger is linked to its next block, creating a chain—hence the name.” With blockchain, anyone can look at the latest blocks and their “parent” blocks to determine the state of an address. It also assists with multiple issues that can occur when making digital transactions, such as double spending and currency reproduction.
Remaining cautious with blockchain
Blockchain is essentially the secret weapon behind cryptocurrency’s popularity, as it has been positioned as the technology that will help address digital currency’s security issues. While it has great potential, there are some possible risks that could hinder its growth. For instance, the many cryptocurrency hacks we’ve seen recently have proven blockchain is not exactly foolproof. The mechanism involved in blockchain has some vulnerability in itself – which is a friendly reminder that we still need to be cautious in how we view this technology as it relates to security. Remember that blockchain is created by people, who can make mistakes.
Therefore, it’s important we all remain cautious when it comes to treating this technology like the end all be all. So, if you’re considering using blockchain technology to secure your cryptocurrency, be sure to follow these tips:
- Don’t put all your eggs in one basket. Diversity is king when it comes to cryptocurrency. Since blockchain isn’t a sure-fire way for securing cryptocurrency transactions, make sure you do your research on the various “coins” out there. Select a nice variety of currency types so that if one cryptocurrency is attacked, you’ll still have a few other types to rely on.
- Always have a plan B. Make sure you have a paper equivalent of records so that all your transactions are not bound by something that is prone to human error. That way, if for some reason something does go wrong with blockchain, you still have your important transactions documented elsewhere.
- Do your homework. With blockchain and any new and emerging technology really, make sure you always remain a bit skeptical. Do your homework before you embrace the technology – research your options and make sure there’s been no security issues.