Every new technology has kinks that need to be worked out. Before a new innovation can become mainstream, there is a natural process of trial and error where unanticipated issues can be identified and addressed. Cryptocurrency and blockchain tech have been working their way though this process on their long road to mainstream acceptance, but experts are starting to point out some security issues with blockchain technology that has been scaring investors away from the crypto space.
Reasonable apprehensions about blockchain technology is starting to affect cryptocurrency use. And with last year’s headlines replete with examples of large, influential companies experiencing major security breaches, the public cannot help but be cautious about the potential security issues that could arise when using cryptocurrency and blockchain technology.
Blockchains are Designed to be Trustless – But are They?
In an average day, there were about 100,000 users added to cryptocurrency trading platforms throughout 2018. With the growing number of active daily users in the cryptocurrency space, security is a growing concern on everyone’s minds.
Blockchains are designed to store and transmit data in a secure manner. The process is verified by sophisticated algorithms and meant to be tamperproof. However, there’s billions to be made in hacking the blockchain security design – and where there’s a will there’s a way. Miners have innovated creative ways to cheat blockchain hash algorithms, including “eclipse attaches,” where an attacker manages to take over a node in a blockchain and manipulate it at will. Likewise, miners have been able to launch successful “51% attacks,” in which the majority of a blockchain’s nodes are taken over.
Security Concerns Spook Investors
Investors are growing increasingly worried about cybersecurity issues – and these concerns are not entirely unfounded. Theft and loss wiped out over $1.1 billion from cryptocurrency markets in the first half of 2018 alone, and even the most committed cryptocurrency supporters cannot ignore this massive problem. Investors are concerned about losing their hard-earned coins, and this is especially true among the smaller investors that brought the cryptocurrency markets to a head in late 2017.
Small investors tend to have a higher risk threshold compared to large corporate investors, so losing the support of small-cap crypto investors could spell disaster for the crypto markets in 2019. Fortunately for cryptocurrency’s supporters, however, it’s not all bad news. The positive side of blockchain hacks occurring is that we now know what security weaknesses hackers are able to exploit. This will help companies make strides towards building a stronger system. If these problems are fixed, we may see greater mainstream adoption of cryptocurrency and blockchain systems worldwide.