Security and Cyber-Attack of a Bitcoin - Essay Example

Bitcoin Bitcoin is a form of currency first created in 2009. Bitcoin was formed with essence of making online transaction anonymously without the need of middlemen or banks. The person who is thought to have created the Bitcoin is known as Satoshi Nakamoto but, the name is not real. Bitcoin came with some features that led many merchants to accept it. For example, the use of Bitcoin does not require one to provide his or her real name. Additionally, transaction conducted using the Bitcoin do not require any transaction fees. The above features of a bitcoin attracted many merchants to transaction use of the bitcoin. For example, one can use a Bitcoin to transact online or buy things like manicures, pizza or web-hosting. Bitcoins became famous after its introduction in 2009 because of its features. For example, as mentioned earlier, transaction using Bitcoin can be done anonymously. Additionally, Bitcoin is used online meaning that the transaction can be conducted in any part of the world. Because of such features tied to Bitcoin, transaction can be done without any regulation from the government. In addition, Bitcoin cannot be charged like normal currencies. However, the use of bitchin led to huge criticisms from interest groups and some countries. Altshuler et al. (198) point out that Bitcoin attracted many users right after it was introduced in 2009. The study shows that a Bitcoin was going for $30. It attracted much attention in market and media far more than any other currencies. However, the use came under criticisms from interest groups and politicians. The critics argued that the use of Bitcoin encouraged money laundering. The senators from the U.S. and the interest groups from Germany such as the Federal Association of Digital Economy pointed out that Bitcoin are not good. They argued that because of anonymity features of bitchin and its use, the currency attracted illegal transaction and money laundering. They also pointed out that the use of Bitcoin will not be good to the society because users will evade taxes. Study reveals that bitcoin is decentralized in nature making it a bit hard to regulate. However, some users argue that the anonymity nature of a bit coin is not the main objective behind its application. Others people have different views. One member behind the development of Bitcoin, Jeff Garzik explains that there is no statistics relating to the illegal transaction using bit coin. There seem to be huge disagreement relating to anonymity despite claims that anonymity has nothing do to with its use. Other users believe that anonymity is the main idea for use of Bitcoin. For example, WikiLeaks, organization renowned for releasing government and people secretes accepts Bitcoin. According to the organization, Bitcoin is more secure anonymous currency that makes it hard to trace the user. The company advised the interested parties to the organization to donate money using Bitcoin. Some people trust Bitcoin because of its nature of no trust. Here, it means that a Bitcoin is decentralized. It eases the access by the users. Additionally, the source code is easy to access by anyone at any time, Bitcoin uses open sources. Such features of a Bitcoin allow any person globally to verify transaction procedures of Bitcoin. Additionally, study reveals that transactions and Bitcoin available is easy to verify anytime by anyone. Transaction can also be made without conducting other parties lie in the case of banks. It is possible to do it because the system is secure. The security features of Bitcoin is similar to the one used by online banking. In addition, Barty explains that the security nature is attributed to cryptographic algorithms source code that makes it difficult to break. Network transaction of Bitcoin is safe because many users monitor it. In this sense, users who cannot be trusted bring no worries to other users. Transaction with Bitcoin According to Gervais et al. (54), a transfer of Bitcoin to users is conducted using a unique address call Bitcoin address. The address provided to a transaction matches with a unique public or private key pair. The key pairs are used to transfer bitcoin ownership between the addresses. Bitcoin blocks prevent signing of one Bitcoin to different users. Bitcoin blocks are normally aired to the whole network. This is possible with the application of hash-based proof of network. Hash based proof of network is a tech used in bitcoin transaction to avoid double spending. Security of a Bitcoin Despite the huge security features employed in the transaction of a Bitcoin, security features remain under threat. As mentioned above, Bitcoin uses various technologies to improve its securities. It is normally referred to as crypto-currencies because of its application of cryptographic algorithms. Research of security features of a Bitcoin reveals that it is under huge security threat. The security threat of a Bitcoin can be grouped into two; Denial of services and double spend attacks. Denial of Services It is one of the violations of Bitcoin transactions that make it difficult for Bitcoin users to conduct a transaction. Denial of services happens when an attacker makes a currency unworthy by removing the Bitcoin value of a specific user. The attacker can also bring down the value of a Bitcoin. Such attack is deemed seriously to system and can results to a huge impact on financial systems. Double Spend Attacks Such security threat can affect the reliability of Bitcoin making the users not to have trust on it. As mentioned earlier on the paper, transaction is done by airing a legal transaction throughout the network. The users or persons who conducted a transaction can obtain whatever they were transacting. Later, the first transaction is deemed invalid hence another transaction that uses the same addresses happens again. Studies by Ayzenberg et al. (1) reveal that double spend attacks happen in two forms; Failure of transaction to be noted in a block, such transaction is deemed invalid when another transaction is conducted. The second transaction affects the first transaction because it is fully added to the block, unlike the first transaction. Such cases are easy to avoid; the Bitcoin users are advised to complete the transaction ones they have seen a number of confirmation. The second type of threat under double spend attack happens when a transaction to block chain, however, another transaction appears that makes the first transaction invalid. For example, a transaction X is made to block chain Z. Later, legal block chain Z’ comes up rendering transaction X invalid because it does not contain X. Z’ contain a different transaction, X’. The user that conducted the transaction in the first place and provided goods to the issuer of Bitcoin will not get the Bitcoin coins (Ayzenberg et al. 1). Cyber-Attack of a Bitcoin Recently, the users of Bitcoin have had to halt the transaction of Bitcoin as a result of a huge cyber-attack from unverified sources. The unknown sources are said to have been spamming the transaction of Bitcoin. Such attacks are some of the dangers exposed to the users of Bitcoin coins. According to Flitter (2014), cyber-related attack of Bitcoin is call distributed denial of service attack. The attacker uses it to send many illegal transactions to companies that trade using Bitcoin. Spamming of online storage of Bitcoins can force the companies to stop the transaction. Such efforts must be made by companies so as to determine the real transaction. In conclusion, Bitcoin can easily attack just like any other business conducted online. The security features of Bitcoin that makes it vulnerable can result to huge risks, unlike the hard currencies. Works Cited Altshuler Yaniv, Elovici Yuval, Cremers, B. Armin, Aharony Nadav and Pentland, Alex. Security and Privacy in Social Networks. New York: Springer Science & Business Media, 2012. Print. Ayzenberg Mick, Cecchetti Adam and Aggarwal Akshay. A Security Analysis of the Bitcoin Mining Ecosystem. Dejavu Security. (n.d). Print. Barty, Andrew. Bitcoins the currency of the future: Collection of useful information, secrets and strategies. New York: Andrew Barty, 2014. Print. Flitter Emily. “Cyber-attack on bitcoin a big warning to currencys users.” Reuters. 12 Feb 2014. Print. Gervais Arthur, Karame, O. Ghassan, Čapkun Vedran and Čapkun Srdjan. Is Bitcoin a Decentralized Currency? Copublished by the IEEE Computer and Reliability Societies. 2014. Print. Read More