What is cryptocurrency?
You probably hear the word Bitcoin and cryptocurrency interchanged regularly from a number of sources across the news and media. Do they mean the same thing? If not, what’s the difference? Well, let’s start by breaking the word down.
Cryptocurrency is a digital currency that is based on blockchain technology and secured by a process known as cryptography.
When you see the word cryptography your mind may wander into a world of spies and espionage but this term simply refers to the study of secure communications techniques that allow only the sender and intended recipient of a message to view its contents.
If we then apply this to our topic, cryptography is used as a means to ensure that this digital currency is nearly impossible to counterfeit or double-spend. But how secure is it?
Is cryptocurrency secure?
Most cryptocurrencies you will hear about such as Bitcoin or Ethereum are decentralised networks based on blockchain technology. Although it may sound like a complex term at first, a decentralised network is essentially a network that doesn’t rely on a single person or authority to make decisions and control the system. This power is instead distributed evenly between everyone on the network.
Blockchain technology is a distributed ledger, similar to what you might find in a bank to record transactions, enforced by a wide network of computers. Each transaction on this network is recorded into ‘blocks’ and time-stamped. Thanks to these records any attempts at forgery or other criminal activities are extremely hard to accomplish as the original record will remain as evidence and any change to the record would require the approval of everyone on the network.
In addition to these built-in features, systems used for cryptocurrency also have their own sets of security requirements to help protect us called Cryptocurrency Security Standards (CCSS).