The Security of Cryptocurrency and Blockchain Tech

The Security of Cryptocurrency and Blockchain Tech

The Security of Cryptocurrency and Blockchain Tech

Cryptocurrencies are decentralized digital financial assets designed to act as a medium of exchange using blockchain technology. You must have heard of popular cryptocurrencies like Bitcoin and Ethereum. However, there are many cryptocurrencies in circulation – according to CoinLore, there are more than 5,000 cryptocurrencies available. 

People can use cryptocurrencies to make purchases, but most invest in them as they would in stocks and precious metals. Dealing in cryptocurrency is exciting, no doubt, but it can be risky if you don’t have complete knowledge about them.

Let us, therefore, take you through what are cryptocurrencies and blockchain, important cryptocurrencies other than Bitcoin, and the benefits and risks of blockchain technology.

What are Cryptocurrencies and Blockchain?

Before moving forward, it is crucial to understand what are cryptocurrencies and blockchain. A cryptocurrency is an encrypted and decentralized digital exchange medium. While you have a central authority to manage and maintain currencies like the US dollar and Euro, there is no such authority to manage cryptocurrencies. Cryptocurrency users maintain and manage the currency through the internet.

The first cryptocurrency was Bitcoin, which was brought in principle by Satoshi Nakamoto in a paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” in 2008. Nakamoto designates the project as “… an electronic payment system based on cryptographic proof instead of trust.”

The cryptographic proof is in the form of transactions, which runs with the technology called blockchain. Our blog post – “Cryptocurrency For Dummies: What is Cryptocurrency & How Does it Work?” – provides a detailed explanation.

A blockchain is a distributed and open ledger in which transactions happen in code. Blockchain is comparable to a checkbook that users can distribute around the world through innumerable computers. Transactions occur in blocks, which then get linked together on a chain of past cryptocurrency transactions.

As Buchi Okoro, CEO, and co-founder of the African cryptocurrency exchange Quidax, explains, “Imagine a book where you write down everything you spend money on each day. Each page is similar to a block, and the entire book, a group of pages, is a blockchain.” 

Blockchain maintains a unified transaction record, with every person using cryptocurrency having a copy of their own book. Every new transaction gets logged into the software, and the new information is updated in the blockchain simultaneously, which ensures all records are accurate and identical.

There are two main validation techniques to prevent fraud – proof of work or proof of stake. Every transaction gets checked with either of these techniques.

Bitcoin and Beyond

Bitcoin introduced cryptocurrencies to the world. As such, every new cryptocurrency that followed tries to match up to it.  

In terms of market capitalization, popularity, and user base, Bitcoin continues to be the leader. However, since its introduction about a decade ago, many virtual currencies have flooded the market.

Let us now look at cryptocurrencies beyond Bitcoin

Ethereum (ETH) – This is a decentralized software platform where you can build and run Smart Contracts and Decentralized Applications (DApps), which is designed to be free of any third-party interference, fraud, downtime, or control. Launched in 2015, Ether is now the second-largest digital currency by market cap after Bitcoin. Developers need Ether to develop and run applications on Ethereum, and investors need it to make purchases of other digital currencies.

Litecoin (LTC) – Launched in 2011, Litecoin is among the first few cryptocurrencies to roll out after Bitcoin. In the cryptocurrency market, Litecoin is like silver, and Bitcoin is like gold. It is an open-source global network with no central authority controlling it. It uses “scrypt” as proof of work.

Cardano (ADA) – Cardano reportedly plans to become the financial operating system of the world by creating decentralized financial products. It also is designed to provide solutions for chain interoperability, legal contract tracing, voter fraud, and other purposes. One of the founding members of Ethereum, Charles Hoskinson, created Cardano.

Polkadot (DOT) – Polkadot aims at delivering interoperability between other blockchains. Designed to connect permissioned and permissionless blockchains – including oracles – it allows systems to work together under a single roof. Unlike Ethereum, Polkadot offers developers built-in security. Gavin Wood, another member of the Ethereum team, created Polkadot.

Bitcoin Cash (BCH) – A split in Bitcoin led to the creation of BCH in 2017. The split occurred mainly due to the scalability issue. While the Bitcoin network puts a cap on the size of blocks at one megabyte (MB), BCH offers a block size of eight MB. Due to its bigger space, the transaction speed of BCH increases since larger blocks can hold more transactions within them. 

Stellar (XLM) – Designed to provide enterprise solutions, Stellar is an open blockchain network connecting financial institutions facilitating larger transactions. It eliminates or reduces the cost and decreases the transaction time substantially for substantial transactions between banks and investment firms. The native currency of Stellar is Lumens (XLM), and individuals can also use the blockchain. It allows cross-border transactions between any currencies.

Chainlink – Chainlink is a decentralized oracle network that connects smart contracts like Ethereum to the data outside of it.  Among its many uses, Chainlink can help monitor water supplies for pollution or illegal siphoning.

Binance Coin (BNB) – This is a utility cryptocurrency used as a payment procedure for the fees associated with trading on the Binance Exchange. People who use the token for the exchange can get a discount. Binance’s decentralized exchange operates on Binance Coin’s blockchain platform. Based on trading volumes, it is one of the most widely used exchanges in the world.

Tether (USDT) – Tether is a popular Stablecoin that tries to attach its market value to a currency or other external reference point to diminish volatility. The price of Tether is directly linked to the price of the US dollar. People find it easy to convert this digital currency to the actual physical currency.

Monero (XMR) – Launched in 2014, Monero is an open-source, secure, private, untraceable cryptocurrency that has garnered significant interest among the cryptography community. Monero is a totally donation-based and community-driven cryptocurrency. Its main focus is on decentralization and scalability, and it uses the “ring signature” technique to keep its transactions secure and private.

Dogecoin – This cryptocurrency started as a joke in 2013, but has garnered interest after people such as Elon Musk, Mark Cuban and Snoop Dogg gave it public attention.

Security Benefits and Risks

Blockchain technology has the potential to bring about major changes in the security industry. It not only helps drive digital currency exchange, but can also offer security solutions in general to address global security challenges.

From double spending and data security to cross-border transactions, currency reproductions, and frauds, blockchain technology can help address major challenges associated with digital transactions.

Here are some of the security benefits and risks associated with this technology:

It can protect sensitive records and authenticate the identity of a user – It can particularly help the banking sector. It is easy to spot data manipulation with the help of blockchain technology. The banks can think beyond asymmetric encryption and caching in public keys. Blockchain technology allows the authentication of users and devices without password protection. Due to its decentralized network, it becomes easy to generate consensus between different parties for verification, which happens through blockchain-based SSL certificates. The distributed and decentralized network ensures that no data breaches take place.

It increases structural security of IoT devices – Some block-less distributed ledgers help enhance the structural security of IoT devices. Devices here can recognize and interact with each other in a peer-to-peer manner, and there is no need for a third-party authority. With two-factor authentication also present, you get improved security with no risk of forgery.

It can secure all your internal communications Content security is vital for both large and small enterprises. Data leaks and cyber espionage can affect every organization. Despite end-to-end encryption, sensitive information can still leak because it does not cover the metadata. But in the case of blockchain technology, the metadata remains scattered in the distributed ledger. It does not collect at one centralized point, making data leaks impossible to occur.

No need for passwords – Blockchain technology can authenticate users and devices – therefore, there is no need for a password. There is no room for human error because blockchain technology can authenticate users and devices, preventing any potential attack.

Privacy and security of digital chats – With takers increasing by the day, messenger services like Facebook Messenger, Viber, WhatsApp, Alipay, etc., can use blockchain technology to improve their privacy and security. As cases of data breaches increase, mobile security is an issue that cannot be ignored. Since no single source can control or censor blockchain-decentralized networks, it is extremely secure. Scattered metadata provides another security layer to the communication. Moreover, since you don’t need to link your email addresses or telephone numbers, it increases your privacy.

Blockchain technology can prevent identity theft, provide protection against data tampering and protect your critical infrastructure.

Blockchain technology has also paved the way for a future of smart contracts. Smart contracts (digital contracts) allow you to exchange money, shares, property, etc., transparently with no middleman.

However, every new technology has some concerns, and blockchain technology is no exception. Mass adoption and security are two areas of major concern. Cryptocurrency is the latest on the block in the fintech industry, and there are security and legal concerns here, as well.

As adoption of cryptocurrencies increase across industries, more security features are coming up to secure the transactions. People are trying to learn how cryptocurrencies can help in areas other than the financial sector.

Also, issues like compliance, regulations, and enforcement are among the matters that still need attention. For example, regulatory and compliance issues such as KYC (Know Your Customer) and AML (Anti-Money Laundering) laws need more clarity. However, as the adoption rate increases, the technology can address these issues.

Irrespective of the industry you belong to, it is crucial to do everything you can to keep your company secrets safe and secure from prying eyes. DocuServe specializes in offering industry-leading solutions for keeping your digital content safe. Our secure document and rich media sharing app can reduce the risk of data exposure. With DocuServe, you can easily control content distributed to employees, vendors, and potential customers. Contact us to learn more.

Facebook Cryptocurrency Libra

Will Facebook Change The Cryptocurrency Market?

With over two billion users worldwide, Facebook rules the social media space. But it is now setting its ambitions even higher, planning to take a plunge in the currency market.

Yes, Facebook is joining the cryptocurrency game. It is about to launch a Bitcoin-like currency called Libra. Cryptocurrencies like Bitcoin and Ethereum have generated a tremendous amount of interest as well as confusion. To learn more about cryptocurrencies, refer to our blog post – “Cryptocurrency For Dummies – What is Cryptocurrency & How Does it Work?

But in this blog post, let us focus on what Facebook plans to achieve through its proposed currency, Libra.

What is Libra?


Facebook’s Libra will be a cryptocurrency, which will allow you to make purchases or allow you to send money to individuals at almost zero transaction fees. According to Libra, “Libra’s mission is to enable a simple global currency and financial infrastructure that empowers billions of people.”

A Roman unit of weight, Libra in the context of Facebook’s cryptocurrency tries to invoke a sense of financial freedom. You can buy or spend your Libra online or at a grocery store near you by using third-party interoperable wallet apps or Facebook’s Calibra wallet, which the company plans to incorporate into all its apps, including WhatsApp and Messenger. Facebook is planning to launch its cryptocurrency Libra through its blockchain system sometime in the first half of 2020.

Facebook does not plan to control Libra fully. Instead, Facebook will get a single vote – just like other founding members of the Libra Association – which include Uber, Andreessen Horowitz and Visa. Each of the founding members has invested at least $10 million in the project. The open-source Libra blockchain will be promoted by the association with its Move programming language. The association also plans to enter into agreements with other businesses to use Libra for payment and give rewards and discounts to customers.

Facebook will launch a subsidiary company by the name of Calibra to handle its crypto dealings and protect the privacy of its users by not allowing your Libra payments to mingle with your Facebook data, which means it cannot be used for ad targeting. Your publicly visible transactions will not be tied to your real identity. Libra association members along with Facebook (Calibra) will earn interest on the money that users cash in, which is kept in reserves so that the value of Libra remains stable.

Facebook’s global digital currency plans to promote financial inclusion for those who don’t use banking services, and it is expected to have more privacy and decentralization. Facebook does not intend to make a lot of money immediately through Libra; instead, they want to be there for the long-term so that they can get more payments into its online domain. According to Facebook’s VP, David Marcus, “If more commerce happens, then more small businesses will sell more on and off platform, and they’ll want to buy more ads on the platform so it will be good for our ads business.”

What does Facebook want to accomplish with Libra?

As reported by Josh ConstineZuckerberg Money LibraEditor-at-Large for TechCrunch – “In cryptocurrencies, Facebook saw both a threat and an opportunity. They held the promise of disrupting how things are bought and sold by eliminating transaction fees common with credit cards. That comes dangerously close to Facebook’s ad business that influences what is bought and sold. If a competitor like Google or an upstart built a popular coin and could monitor the transactions, they’d learn what people buy and could muscle in on the billions spent on Facebook marketing. Meanwhile, the 1.7 billion people who lack a bank account might choose whoever offers them a financial services alternative as their online identity provider too. That’s another thing Facebook wants to be.”

The existing cryptocurrencies like Bitcoin and Ethereum are not properly designed to be a medium of exchange because of their uncontrolled price, which results in their erratic swings. It becomes difficult for the traders to accept these coins as payments. Also, these cryptocurrencies cannot be exploited to their full potential because there are not many places where they can be used in place of dollars, and it is not easy for the mainstream audience to deal in these coins. But Facebook can tackle this problem head-on because it has more than seven million advertisers and 90 million small businesses in addition to its user experience expertise.

Facebook now wants to turn Libra into another PayPal. Facebook is confident because it thinks that it is easier to set up Libra, it is easy to use as a payment method, more accessible to those who don’t have access to banking services, more efficient than others because there are fewer fees, and flexible and long-lasting due to developers and decentralization.

According to Facebook’s Libra documentation, “Success will mean that a person working abroad has a fast and simple way to send money to family back home, and a college student can pay their rent as easily as they can buy a coffee.” When you look at exploitative remittance services charge, which averages around 7% for the money sent abroad, totaling $50 billion from users annually, it certainly seems to be a big improvement. Libra would allow microtransactions of a few cents, which is unthinkable with the in-built credit card fees.

But it is a steep climb for Facebook ahead in the cryptocurrency market.

How does Libra work?

All you need to do is cash in your local currency and get Libra, which you can spend like dollars, with fewer transaction fees and without disclosing your identity. You can also cash your Libra whenever you want.

The Libra Association

It would have been difficult for the general public to trust Facebook in the crypto world, which is why major corporations have been assembled to form the Libra Association. This not-for-profit entity headquartered in Switzerland will overlook the development of the token, keep the reserves safe and streamline the governance rules of the blockchain.

Some of its founding members as reported by The Block’s Frank Chaparro include:

Payments: Mastercard, PayPal, PayU (Naspers’ fintech arm), Stripe, Visa

Technology and marketplaces: Booking Holdings, eBay, Facebook/Calibra, Farfetch, Lyft, Mercado Pago, Spotify AB, Uber Technologies, Inc.

Telecommunications: Iliad, Vodafone Group

Blockchain: Anchorage, Bison Trails, Coinbase, Inc., Xapo Holdings Limited

Venture Capital: Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital, Union Square Ventures

Nonprofit and multilateral organizations, and academic institutions: Creative Destruction Lab, Kiva, Mercy Corps, Women’s World Banking

Before the official launch of Libra, Facebook plans to increase its present 28-member founding members to 100.

The Libra currency

The Libra cryptocurrency will be represented by three wavy horizontal lines. To make it a good medium of exchange, the value of Libra would largely stay stable. The value of Libra would be attached to a basket of bank deposits and short-term government securities for a number of internationally stable currencies like dollar, pound, yen, Swiss franc, and euro. To keep the Libra stable, the Libra Association will maintain the basket of assets, and they can also change the composition when required to counterbalance major fluctuations.

The exact start value for Libra is still under consideration, but it is likely to be close to internationally stable currencies.

The Libra Reserve

Every time someone cashes in a dollar, that money goes into the Libra Reserve, and the person gets an equivalent amount of Libra in exchange. Should someone cash out of Libra, the Libra that is returned would be destroyed or burnt, and the person gets the equivalent value of the local currency in exchange. It means that there would always be 100% of the value of the Libra in circulation.

The Libra blockchain

All Libra payments would permanently be recorded in the Libra blockchain, which is a cryptographically authenticated database. Libra blockchain is a public online ledger engineered to handle 1,000 transactions every second. It means that the Libra transactions would be much faster as compared to Bitcoin (which allows seven transactions every second) and Ethereum (which allows 15 transactions every second). 

The founding members of the Libra Association will operate and verify the blockchain. 

Libra transactions cannot be reversed. The Libra association in case of an attack will temporarily stop the transactions and take corrective measures for future smooth operations.

The Libra blockchain currently is known as ‘permissioned,’ and here only those entities that fulfill certain requirements are admitted to a special in-group, which will control the blockchain through consensus. But as of now, the Libra association has not found a reliable ‘permissionless’ structure that is safe and secure. The goal of the Libra Association is to create a permissionless system.

What are the incentives to use Libra?

The Libra Association wants to involve more developers and merchants for its cryptocurrency project. The association plans to issue incentives, possibly in the form of coins to those who use the currency. Those who bring in more customers and keep them active for over a year will be rewarded. Traders will also receive a percentage of a transaction for every transaction they process. Businesses can keep the incentives or pass a portion of it to their respective customers.

Libra privacy concerns

Individuals can spend and own Libra through Libra wallets like Calibra and other third-party Libra Association members like PayPal. The philosophy is to make it easy for an average consumer to send money to a friend or use it wherever they want just as they conveniently send a Facebook message.

About the privacy of the Libra, Mark Zuckerberg had this to say, “It’s decentralized — meaning it’s run by many different organizations instead of just one, making the system fairer overall. It’s available to anyone with an internet connection and has low fees and costs. And it’s secured by cryptography which helps keep your money safe. This is an important part of our vision for a privacy-focused social platform — where you can interact in all the ways you’d want privately, from messaging to secure payments.”

What is the difference between Libra and Bitcoin?

There is a mixed bag of reaction for Facebook’s Libra cryptocurrency project. Some say that it will be nothing more than PayPal with the addition of blockchain technology, while others say that it will lead to more adoption of traditional cryptocurrencies like Bitcoin. 

The Bitcoin and Libra are different. While Bitcoin is a decentralized network – which is permissionless and censorship-resistant – Libra will be operated by a group of companies that will still remain answerable to the governments of the world.

There is some skepticism, though, among the lawmakers of several countries against Facebook’s attempt to create their digital currency. As regards monetary policy, Bitcoin and Libra are poles apart. While Bitcoin follows its own supply schedule, Libra is only backed by a basket of currencies that are issued by governments. Libra, unlike Bitcoin, has a face, which can be targeted by the government whenever they want to regulate it.

Also, since Libra will not operate in a permissionless manner, it is debatable for some whether it qualifies as a cryptocurrency or not. Moreover, when talking of Facebook, it is difficult for the consumers to totally forget about all their privacy-related scandals.

Libra seems to be a minor variation of the traditional financial system and is unlikely to have any significant impact on the Bitcoin price.

Will Libra change the world?

According to Facebook’s Libra white paper, the goal is as follows: “A stable currency built on a secure and stable open-source blockchain, backed by a reserve of real assets, and governed by an independent association.”

Their stated aim is to create better access and improved, inexpensive and open financial services for all people – regardless of their location or economic status. The road ahead for Facebook’s Libra project is arduous and is difficult for a single entity to achieve. That is why a consortium of corporations is coming together to helm the project.

But only time will tell whether Libra project gets the support from various stakeholders – most importantly of all – consumers.

With the great potential of Libra and other cryptocurrencies, encryption technology is more important than ever – especially in the corporate world. DocuServe has the industry experience and solutions to protect company data, keeping employees productive without risking data loss. Our eServe encryption solution provides content security in the cloud, mobile access, security at rest and in motion, encrypted data security, remote wipe and much more. Contact us to learn about our industry-leading solutions.



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