As the latest major hacking incidents, banking alerts and FBI and other government warnings indicate, cybersecurity is a major issue for fiat currency financial systems, and possibly for our western data systems as a whole. As the news has pointed out, criminals (and spies) are finding ways to penetrate otherwise secure and time-tested systems, utilizing human error, unpatched vulnerabilities, or even system errors due to pushing the system beyond their design limits, as targeted attacks can do.
Even though it seems easy enough to build a parallel system to take on overload, just as we build more roads when there are more cars, this is actually tricky (in both cases) because mistakes can be very costly, unintended consequences are frequent, and the systems can end up not working right due to predefined redundancy and spare capacity protocols that were part of the original design. In layman’s terms, this is similar to what happens when an 8 lane highway discharges into a 2 lane country road, which everyone admits is stupid, but it still happens.
Bitcoin and other cryptocurrency are based on a new system that uses a special technique, cryptography, to block hackers from accessing and changing information, and they use a validation system that – for now – hackers cannot penetrate. Yet, as Steven Sprague, CRYPSA advisor and cybersecurity expert points out, cybersecurity is still critical for the safety and reliability of this new alternative to handling our money and other stores of value. According to Dr. Sprague, cryptosecurity requires good cybersecurity in each of the computer systems that are used so that encryption keys are not compromised, much less predictable, and wallets and mining software is kept secure.
For those that might wonder what this means, it is a simple matter of keeping your information safe from prying eyes and sticky fingers. As commonly noted in the news media, maintaining your privacy has become big a problem, not only because of the number of hackers and spammers out there, but because we freely participate in unrestricted sharing of information, and because we also have to trust specific third parties (our banks, lawyers, government, doctors, etc.), to keep our most critical information stored safely in their own databases. These huge databases, though, can be targeted by hackers when they want to use our identity and access our wealth. Besides, much of our personal information is also being managed by our internet providers, and services such as Google, Instagram, Twitter, etc. Yet, as I mentioned above, the invention of Bitcoin brought us an excellent option for our privacy: pseudonymity.
With Bitcoin and its related technology, individuals can set up difficult to crack pseudo-identities that give them access to unlimited private storage of information, and wealth. This wealth is stored in a system that modern day hackers cannot access. The wealth is stored in a computer database, preferably one you control personally with no central authority, government oversight nor governmental control . Of course, some individuals think that this is perfect for avoiding taxes and breaking laws, but they forget that in today’s modern financial systems the very rich already have ways to avoid paying taxes legally, as well as for hiding their financial tracks. This is common in fiat currency financial systems, and human nature points to the fact that it will occur in cryptocurrency systems, too, though the public ledger we call the blockchain is really a problem for those that want to hide their activity. In my experience, people who want to hide from government controls usually forget how much our lives and wealth are already controlled by the people that surround us: our family, community and service providers. In my humble opinion, the only way humanity has had to truly avoid these external controls, is to become a hermit living in a desert or the top of a mountain, with no close neighbors nor family. But modern society has made us soft, and many individuals don’t want to go so far, and simply start “living off the grid”, having a home with no public services and no fixed connection to communications nor other public networks. In the US and Canada this is considered extreme, yet in many countries it is normal for everyone outside of big cities. Interestingly enough, cell phones are now being used for cryptocurrency payment systems to allow the poor in these countries to store value and do commerce in a safe and secure manner.
Of course, cybersecurity on cell phones is still important: the cell phone service providers work very hard to keep their systems safe from hackers and spies, as do most reputable internet services, servers and websites. But, as Sony and many banks and international stores have seen, hackers are now penetrating even those systems.
So, what can the Bitcoin user, or user of other cryptocurrency, do? Well, the first step is to ensure basic protection from viruses and other malware on your computers, including mobile systems. Running unprotected systems might work for some people, but it is very risky, and more so if we have enough wealth to become a target. How much is enough? Well, if your neighborly hacker knows you have something he wants, you can be targeted. It is sad to say that poor on poor crime is still prevalent in the world, mainly because the poor can’t pay for hich levels of security. This is one of the big selling points for banking services, private and government insurance, and credit cards: they handle the security and risks for you. Password management is yet another issue, because we are vulnerable to many attacks when our passwords are known or predictable. Yet another suggestion is to manage your identity with disposable public keys (usernames or IDs) when you make transactions. Some cryptocurrency wallets actually require users to create a new identity after every transaction and to move their money to the new identity. This is a good practice, probably a “best practice” for handling transactions with strangers. And multi-signature requirements are good for both cryptocurrency and bank accounts. But, if your computer is compromised, and everything you do is being shared with a hacker, then even these procedures will be vulnerable.
To conclude, in my opinion even when we have the best cryptosecurity, it is advisable, even necessary, to protect ourselves against hackers and malware. You might not have the same volume of wealth as Sony, Target, Morgan Chase, etc., but your savings in Bitcoin – and other cryptocurrency – are at risk if you don’t take basic cybersecurity measures. And, the very pseudonimity of bitcoins and most cryptocurrency results in almost no way to get your money back once it has been stolen, save putting those coins on a special “watch list” for miners to monitor (this is really difficult to do, though, since it could easily create gridlock and abuse). Oh, and before I forget, remember that if you have children or other family members that can access your computer(s) you need to also be careful of any security weaknesses they might represent: a click on the wrong link on a Facebook message could open the door for a hacker to install spyware or malware in your system.
So much information and dangers, and so much confusion! Yet, we are better off than we were before, because we are creating a new financial system that included cryptosecurity for all of us.