Exploring the Tech Behind Secure Crypto Payments

Exploring the Tech Behind Secure Crypto Payments

Cryptocurrency is taking over as the most preferred form of currency for online transactions due to its exceptional security features. Over the years, numerous threats orchestrated by cybercriminals have plagued online transactions, and this has resulted in substantial financial and personal data losses for users. These incidents have severely eroded trust in the online space and caused many individuals to shy away from it altogether.

Fortunately, the emergence of cryptocurrency brought a sigh of relief to most online users. Many businesses and consumers have witnessed cryptocurrency’s reliability and advanced security, which explains why they use it in their transactions. The secret behind the secure cryptocurrency is blockchain technology. In this article, we explore this exceptional technology.

What is Blockchain?

A blockchain refers to a decentralized ledger that works within a network of computer devices to record transactions. It comprises a consistently growing records list, known as blocks, which are secured and linked using cryptography. Every block usually has a cryptographic hash of the preceding block, data for executed transactions, and a timestamp.

Cryptography prevents the alteration or removal of a block after its inclusion into the blockchain. However, the block can only be removed if the user gets a consensus from both ends of the network.

The Basics of Blockchain Security

The blockchain creates data with in-built security attributes. It is primarily based on consensus, decentralization, and cryptography principles that guarantee trust in every transaction.

Data is structured into blocks in distributed ledger technologies (DLT) or blockchains, and every block has one or more transactions. The blocks are connected in a cryptographic chain that cannot be manipulated or broken. The transactions in every block also undergo a verified consensus mechanism and a thorough validation process to ensure they are legitimate and precise.

Blockchain technology allows decentralization via the participation of users in a distributed network. It is failure-proof and cannot allow a single user to alter or delete records of transactions. This feature has made cryptocurrencies preferable for businesses because it curbs chargebacks. The gaming sector has also adopted this technology, and this has led to the emergence of many notable crypto poker sites that accept cryptocurrency as a payment option. These sites also have generous welcome and crypto bonuses, as well as fast withdrawals. Moreover, they have low transaction fees even for large deposits.

Types of Blockchain Technologies

There are two types of blockchain technologies with different security aspects. Let’s explore them below.

Public Blockchain Networks

Public blockchains use internet-connected computers or devices to achieve consensus and authenticate transactions. They allow any interested persons to join the system and remain anonymous.

Bitcoin is currently the most globally-renowned public blockchain that enables users to achieve consensus through “Bitcoin mining.” The computers connected to the Bitcoin network undertake the task of solving complicated cryptographic problems in order to create proof for validating each transaction. However, besides public keys, this network has restricted access controls.

Private Blockchain Networks

This type of blockchain is restricted to a specified number of users who must identify themselves before accessing the network. Private blockchains have advanced security protocols for verifying a user’s identity and confirming membership before granting access to user privileges. The users in this network will form a members-only or private “business network.” This network can be classified into permissioned and permissionless blockchains.

  • Permissioned Network – This blockchain uses the selective endorsement process to achieve consensus. This network also has more access and identity controls and uses certificates to grant identities to its users.
  • Permissionless Network – This private network doesn’t have restrictions for its users or processors. Due to this, permissionless network enjoys greater distribution and decentralization.

Blockchain and Cyberattacks with Fraud

Although the blockchain technology has demonstrated its effectiveness in preventing cybercrime, cybercriminals are resilient in their attempt to find loopholes and weaknesses around it. The blockchain technology itself is impenetrable, but the user’s negligence can create opportunities for cybercriminals to strike.

Unfortunately, several businesses and individuals have fallen victim to such successful frauds and hacks. Such instances show that although blockchain is strong, users must exercise caution to prevent cyberattacks. Here are the attacks cybercriminals can deploy against the blockchain system.

Phishing Attacks

Phishing is a fraudulent attempt by criminals to get the credentials of an unsuspecting blockchain user. This attack always appears genuine and can be difficult for the victim to detect.

Cybercriminals meticulously design and send emails to wallet key owners. They ensure the email looks like it comes from a legitimate source. These emails often contain fraudulent hyperlinks, which compels victims to disclose their credentials unknowingly. Once they gain access to the necessary information and personal data, they can inflict losses both on the blockchain network and the individual user.

How to Stop Phishing Attacks

  • Install a verified add-on to enhance browser security
  • Don’t use your electronic wallet in an open Wi-Fi network
  • Install a detection software for malicious links and reliable antivirus software to increase device security
  • Ensure your software and system are updated

Routing Attacks

Routing attack involves the interception of data being transferred to internet service providers. Since blockchains heavily rely on real-time big data transfers, cybercriminals can exploit this vulnerability and extract confidential data behind the scenes. Unfortunately, users are often unable to detect the presence of a routing attack as their operations continue normally.

How to Prevent Routine Attacks

  • Setup a secure routine protocol with certificates
  • Use strong passwords and change them frequently
  • Use data encryption

Sybil Attacks

This attack is more technical and can paralyze blockchain users while creating massive losses too. In the Sybil attack, the cybercriminals create many fabricated network identities and use them to flood the network in order to crash the system. Once the system is down, they can steal from the blockchain users.

How to Prevent Sybil Attacks

  • Closely monitor the behavior of other nodes and check those that forward many blocks from one user
  • Use reliable consensus algorithms

51% Attacks

One of the most feared attacks in the realm of blockchain is the 51% attack, which typically occurs during the early stages of a blockchain’s development. It occurs when an organization or single user gathers over half of the hash rates, allowing them to seize the whole blockchain. This attack is catastrophic because the fraudsters will have the ability to modify transactions to their liking. They can also cause double-spending by reversing completed transactions. However, private and enterprise blockchains are not susceptible to this attack.

How to Prevent It

  • Do not use PoW (proof-of-work) consensus processes
  • Effectively monitor the mining pool
  • Ensure your hash rate is consistently higher

In Summation

Blockchain technology has greatly assisted in improving online transactions through cryptocurrencies. This technology poses significant challenges to cybercriminals attempting to breach financial and personal information. As this technology continues to advance, it will continue to play an integral role in boosting the security of online transactions.

At Solutiontales we make it easy to understand the throes of cryptocurrencies, but our words should not be taken as a financial advice and we do not give any guarantees for any crypto platform mentioned on the website so please do your own research for the same. Remember, a wise investor can make money in a bull or bear market when given the right data.