It is now 12 years down the line, and cryptocurrencies remain the better alternative for transacting. In these twelve years, cryptocurrencies have gone through highs and lows, setbacks, milestones, and so much more to get a seat at the table.
Following the COVID 19 pandemic, developers, investors, and users alike now more than ever better understand the potential within these assets. When the pandemic stomp struck, many assets lost their values and could barely stay above support levels. However, while assets were tumbling down, cryptocurrencies held their ground, with many recording new all-time high prices. For instance, Bitcoin, the earliest cryptocurrency, went so far as to surpass the 63k mark.
Cryptocurrencies were created to provide an alternative to traditional financial markets as the world moved to create a digital future. Unfortunately, the early days of the crypto sector were characterized by several hackings and theft incidences that saw crypto holders lose their assets in millions of dollars. This, however, did not stop cryptocurrencies from spreading across the world. As of 2021, the estimated number of cryptocurrency owners is said to have reached 300 million users.
What makes cryptocurrencies secure?
Created from blockchain technology, cryptocurrencies come with advanced security measures that have gone a long way in ensuring the security of these digital ledgers. The decentralized nature of blockchain prevents any particular entity from controlling the block, unless in rare cases like the 51% attack. In addition, cryptocurrencies use advanced encryption to verify transactions making it hard for third parties to access assets.
A major security feature with the use of cryptocurrency is the irreversibility of the transaction. This is different from the traditional financial industry, where credit card companies can impose “charge-backs.”
Over the years, there has also been an improvement in encryption techniques used on the blockchain. As a result, there is also increased safeguard against account tampering, fraud, and theft of personal data.
Another security feature common with wallets and cryptocurrency platforms is the two-factor authentication, where users need the 2FA code for that specific account login. Thus, two-factor authentication adds another security layer to users’ accounts.
Two-factor authentication improves the account’s security because the code is not only a password in itself; it is also account-specific.
While cryptocurrencies are on an upward trajectory, it is still a nascent industry with a lot to learn and discover.
How cryptocurrency security has evolved
The early hackings and breaches opened an opportunity for the industry to develop strategies to mitigate security threats. As a result, exchanges and wallets have taken serious steps to prevent similar events from happening.
A critical security feature that has evolved over the years is the use of wallets and private keys. These wallets come with several security features like unique addresses for every transaction, checking references, identification, and checking background information (Know Your Customer process) of all key holders, and assigning redundant private keys to each wallet for recovery purposes.
Lastly, the ongoing recognition and regulation of the cryptocurrency industry adds credibility and acceptance and further instilled confidence in the use of cryptocurrencies. Governments have slowly embraced cryptocurrencies, with some going so far as to create the Central Bank Digital Currencies (CBDCs). Just recently, El Salvador became the first country in the world to adopt digital currency as a legal tender.
