Creating Bitcoin Security--How Will We Prevent Bitcoin Theft in the Future?

Everyone knows the story of the Bitcoin giant, Mt. Gox crashing and many people loosing their Bitcoin. Since it's inception, Bitcoin has been known as a highly volatile internet currency, but one which has the potential not only as the "Currency of the Future", yet also as a way to play the Bitcoin market and potentially gamble yourself some money.

8753275612_e1c22ef45a_z

Bitcoins susceptibility to fall has been proved yet again, however. Recently, Bitstamp reported that unknown attackers had successfully entered their systems, and confirmed that they stole over 19,000 Bitcoin. The equivalent of which is around 5 Million US Dollars, it is a meager amount compared to the 400 Million US Dollars stolen by the attack that took Mt. Gox down.

Bitcoin is supposed to be the currency of the future. These attacks, however, seem to say otherwise. If Bitcoin services like Bitstamp remain vulnerable to such attacks, then the reliability of Bitcoin is severely hurt, and may never enter the stable stage of a currency that can actually be used and trusted.

One adventurous entrepreneur created a system that injects a bitcoin wallet into your hand. This technology, while not removing the need for services like Bitstamp, allows a user to store bitcoin locally and always on them and uses known and secure NFC technology, the same that is used in such applications such as Google Wallet and Apple Pay, in order to communicate with other devices. This solution seems a bit ridiculous, but who knows? Maybe we will all be waving our hands at the cash-register instead of fumbling for a wallet.

NFC on Android

The problem Bitstamp faced with it's hacker intrusion, was its "Hot Wallet". In order to facilitate transactions between it's users, it had a portion of its bitcoin funds online, for easy access. Most of the companies funds, however, still remained offline and so much more secure. The problem, then, is securing these "hot wallets" from future attacks.

Maybe the answer is removing the internet from the equation totally, using a NFC-like technology instead. If you did not know, all NFC does is identify a user to their bank account, and then back to a computer. It security lies in its short-range and radio frequency technology, that is able to transfer data between devices in range of each other. Yet bitcoin transactions on the scale of something like Bitstamp require more range than this, which may compromise security. However, if such a technology could be developed exclusively for the facilitation of bitcoin transactions, and is sufficiently secure and fast, then it would circumvent the vulnerabilities of the net and would finally allow safe bitcoin transaction.

7297820998_d94789a144_zThe problem of bitcoin security is definitely a difficult one. Vulnerabilities in today's bitcoin transaction systems are a-plenty, and simply are not future-proof. If bitcoin is ever to be considered a legitimate currency, than this problem must be, at least to an extent, solved. Today's banks also have their security flaws; bitcoin is supposed to be superior to these systems. As of right now, it simply is not.

How do you think Bitcoin could be secured? Is there hope for Bitcoin to become the currency people hope? What other bitcoin security systems do you know of?

© 2015, insidious All Rights Reserved.

Andrew Plaza

Nerdy Tech fanatic interested in the intricacies of life, technology, and high existence.

comments powered by Disqus