Author: Jeslyn Guo
Cryptocurrency is a digital form of currency that can be used to buy goods and services online. You might have heard about cryptocurrencies such as Bitcoin or Ethereum, which are growing in value and increasingly a topic of discussion. Essentially, cryptocurrency is an electronic form of money that is used as a medium of exchange. But what does this have to do with cybersecurity?
Cryptocurrency allows people and businesses to make transactions without banks, government, or any other intermediary. Digital currencies make up billions in the economy today. It is fully decentralized and has limited regulation, meaning that there is often no authority monitoring transactions. This eliminates the need for a service charge using a third-party intermediary, making it a lucrative way to generate profit. However, the lack of regulation also makes cryptocurrency highly susceptible to attack and manipulation.
Bitcoin was the first form of cryptocurrency, created in 2009. Today, there are many other alternatives which all use cryptography to secure transactions. In 2014, hackers stole $350 billion in bitcoin from Mt. Gox exchange based in Tokyo. How did they do this? Due to the nature of cryptocurrency, attackers can easily cover their true identity when working with it. Cryptography algorithms take the place of a centralized regulator, allowing for anonymity of who makes a transaction. For example, Bitcoin uses public-key cryptography. Let’s take a look at how this works.
For example, let’s say that Joe wants to send Susan a secret, encrypted message. To do this, Joe takes Susan’s public key and encrypts a message to her, and when Susan receives the message she takes her private key in order to decrypt the message. In this way, observers may be aware of the public key and the encrypted message, but cannot decipher the message without Susan’s private key. This is how cryptography works with digital currencies. Protecting private keys are essential in protecting currency.
Criminals can easily hide their identities when asking for a ransom in digital currency, and then easily convert the digital currency into real money without leaving much of a trail. Cryptocurrency is the most preferred form of exchange in ransomware attacks. Large companies and even hospitals have been targeted by attackers, who demand that the organizations pay a ransom in digital currency. A recent example of this is the Colonial Pipeline attack, which you can read about here.
Cryptocurrency comes with many benefits to the global economy. Regulators and governments are still trying to determine the correct structure on how to govern these cryptocurrencies, yet this leaves a window for criminals to exploit. Ensuring that these platforms are safe and secure are of utmost importance.