Digital access is convenient, but we don’t always think of it as safe. Hackers, security, and identity theft have given rise to a $153 billion cyber security market. So, how can we have a digital currency that is both stable and secure?
Historically, much of our financial system has operated with a central authority overseeing the financial security of currencies. Locks keep honest people honest, but thieves are going to find a way around the locks sooner or later, right?
That’s why many believe the blockchain technology at the center of cryptocurrency solves the problem of security through transparency. It makes all transactions public while maintaining personal privacy within the transactions. If anyone can see and verify these transactions, many people think it makes the database unhackable – unlike traditional currencies. Keeping everything in the open makes it harder for criminal activity to occur.
But thieves aren’t likely to change their behavior anytime soon. And the world is only becoming more dependent on digital technology. So how can true security exist in a world where we call into question both systems and people?
Security Through Transparency
In order for true security to exist, a system needs to:
1. Store records
2. Make facts verifiable by anyone
When it does, no one can cheat the system by editing records because everyone can keep track of records as they are created and edited. Verification can happen at any time.
While some questions still exist about the functions used to verify transactions on the blockchain, the current cryptocurrency system appears to be resistant to any kind of manipulation. So, for now at least, the blockchain is unhackable.
Cryptocurrency aims to increase security through transparency. Admittedly, the technology is still growing and developing, but for the time being its security has proven trustworthy.
For more information on the topic of cryptocurrency, check out my book Crypto For Good: Demystifying Cryptocurrencies for Nonprofits.
More Insights from Dunham+Company: “Cryptocurrency 101”