Cryptocurrency is a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank. Cryptocurrencies are a subset of alternative currencies, or specifically of digital currencies. Bitcoin became the first decentralized cryptocurrency in 2009. Since then, numerous cryptocurrencies have been created.
Bitcoin became the first decentralized cryptocurrency in 2009. Since then, numerous cryptocurrencies have been created. These are frequently called altcoins, as a blend of bitcoin alternative
Bitcoin has been a topical issue in the recent financial news, not only for its recently inflated value, but also because digital currency transactions can offer higher levels of security. The nature of cryptocurrencies is complex, since they only exist abstractly. Yet the way transactions are processed between users is their defining feature.
Cryptocurrency transactions do not work like regular financial transactions, they exist neither materially nor digitally. A person could not, for example, have a “balance” of Bitcoin or a “bank account”. According to Coin Desk, platform especialised in delivering bitcoin news, all there is are records of the transactions among Bitcoin holders. These records are stored in what is called a block chain, the key aspect in the process of using digital currencies.
The block chain holds a permanent and cryptographic history of the transactions between different addresses. Every data item stored is visible to the public and transactions can be traced all the way back to the point when the bitcoins used were produced; where we find the “genesis block”, which indicates the very first block of the cryptocurrency generated.
In February 2014, cryptocurrency made national headlines due to the world’s largest bitcoin exchange, Mt. Gox, declaring bankruptcy. The company stated that it had lost nearly $473 million of their customer’s bitcoins likely due to theft. This was equivalent to approximately 750,000 bitcoins, or about 7% of all the bitcoins in existence. Due to this crisis, among other news, the price of a bitcoin fell from a high of about $1,160 in December to under $400 in February.
On August 24, 2016, a federal judge in Florida certified a class action lawsuit against defunct cryptocurrency exchange Cryptsy and Cryptsy’s owner. He is accused of misappropriating millions of dollars of user deposits, destroying evidence, and is believed to have fled to China.
As of July 2017, there are already over 900 digital currencies in existence increasing the competition in cryptocurrency markets.
Many of you are new to cryptocurrency’s. So I want to remind you how important it is to have secure devices. If you have any other tips please share with everyone.
1. Bitcoin itself cannot be hacked. But your phone or computer devices can be. It is completely on YOU to have very secure passwords.
2. The only way you truly own your bitcoin is if you take them off-line and put them on a hard storage device. There are devices like Trezor and Nano S that allow you to do that.
3. Make sure your devices and apps, especially your cell phone are locked with a pin code and/or a fingerprint. Even the individual apps like Coinbase or Bitpay should have a security pin as well.
4. Somewhere away from all your devices, you should have your login and password’s to all your websites, including your phone and email addresses just in case something happens to you. This way your family or loved ones could get access to your assets. A good place would be with your will or in a safety deposit box.
5. It is always wise to fill out every profile completely with phone numbers and valid email addresses.These are other ways to recover access to sites you may have forgot passwords to.
6. Apps like 2-step Google Authenticator and Coinbase Vault, when things like this are an extra security step to protect your bitcoin. Please learn how to use these.
There are ways to permanently lose cryptocurrency from local storage due to malware or data loss. This can also happen through the destruction of the physical media, effectively removing lost cryptocurrencies forever from their markets
Bitcoin.org advises that unconfirmed transactions are not secure. Transaction receipts are not generated by the system; however, payment processors like BitPay provide transaction receipts and order confirmation.
Virtual and crypto currencies have suffered many high-profile failures over the years, criminality and controversy have stalked the idea of cryptocurrencies. But it’s not just the marketplaces and currencies that are subject to misfortune. Malware created specifically to steal Bitcoin and any of the 200 other cryptocurrencies currently in circulation has emerged, fuelled by a rapid increase in the value of bitcoins in 2013 and 2015 as the currency became more popular. Attacks are commonly aimed at Bitcoin wallets and the compromise of private keys.
While cryptocurrencies are digital currencies that are managed through advanced encryption techniques, many governments have taken a cautious approach toward them, fearing their lack of central control and the effects they could have on financial security.
For security, users should create different addresses for transactions with different purposes, avoiding keeping large amounts of Bitcoin in one single address, which would put it at a higher risk of fraud and hacking.