Every once in a while, a novel financial product comes along that brings about a paradigm shift in the finance industry. Cryptocurrencies, although still limited in terms of mainstream adoption in the real economy, have proved over the past few years that they constitute such a revolutionary change.
The advent of digital, intangible money has fundamentally challenged the reign of fiat currency and transformed how we have gone about things up until now.
As cryptocurrencies, led by Bitcoin, continue to gain ground, many have raised concerns regarding security of transactions and users. As various developers continue to create different types of cryptocurrencies targeting more niche markets, anonymous altcoins have gathered much attention. Could they be the answer to our security concerns?
What hackers stand to gain from attacking cryptocurrency users
Why would hackers target cryptocurrencies and their owners? The answer is the same as always: money. An impressive amount of wealth is dealt around nowadays using cryptocurrencies. As of May 25th 2019, the market cap for Bitcoin is $141,485,081,103, with the flagship cryptocurrency trading at a price of $7,984.92 and having reached a transaction volume of $24,174,304,628 in the past 24 hours. Ranking second, Ethereum boasts a market cap of $26,673,606,930 and a transaction volume of $10,542,300,231 in the last 24 hours, while Ripple ranks third with a $16,240,343,230 market cap and Litecoin comes in fifth at $5,851,098,748 in terms of market capitalization.
These figures alone demonstrate just how much potential for illicit profit there is for hackers who manage to pierce through the defenses of the cryptocurrency trading business. Both investors, who hold and trade altcoins, and traders, who process a large volume of wealth every day, are potential targets for hackers. If they found a leeway into hacking a transaction, cybercriminals could transfer the amount traded into their own pockets – and by accessing user accounts on big crypto exchanges they could just steal altcoins held on individual investors’ wallets.
You will find more infographics at Statista
After all, cryptocurrencies have been mainly used as a means to amass and trade wealth rather than pay for services and purchase products in the real economy. As reported by Statista, a relatively small percentage of consumers own cryptocurrencies globally. This amounts to 8% for the US, 6% for the UK and 18% for Turkey. Spain is faring rather well at 10%, while Germany and Italy see 8% of their residents own cryptocurrencies, and Australia comes in at 7%. For France the figure drops to 6%, and even lower at 5% for Belgium and 4% for Luxembourg. Yet stealing coins is not the only way that hackers can make money out of the industry. Crypto exchanges and user accounts are also brimming with a wealth of PII data that is of great value to hackers. PII data, which is short for Personally Identifiable Information, refers to data that can be used to identify or locate a specific person. This includes personal data like name, image, home address or even your ID number or your date of birth. It also includes sensitive financial information, like your credit card number and your banking details – and very often crypto wallets contain such information, as they are linked to a fiat currency back account to facilitate transactions.
How anonymous cryptocurrencies can increase transaction security
Hackers that get unauthorised access to this data can easily use it to commit identity theft and get their hands on the funds in your bank account, too. Or they could hit several users at once and sell their personal data on the black market. This could be devastating for businesses, like crypto exchanges, that handle this data, as well as for individual investors, who do not want to see their personal information end up on the dark web. Whether to get tokens or steal data, cybercriminals have several reasons to be interested in targeting cryptocurrency adopters – and this means that users must make security their top concern.
Anonymous cryptocurrencies have been widely considered as a way to increase the security of your transactions, as they focus on obfuscating the origin and the number of altcoins exchanged, as well as the personal details of the users involved. Dash, which was launched back in 2014, has advertised privacy as its top priority, and has also gained widespread adoption. Other features, like the speed of transactions using Dash, have also helped establish it on the market.
Agree. Zcash’s privacy tech makes it the most interesting Bitcoin alternative. Bitcoin is great, but “if it’s not private, it’s not safe.” https://t.co/HqwQOvSCiz
— Edward Snowden (@Snowden) September 28, 2017
The altcoin has become famous for its PrivateSend feature, which uses a process called coin mixing to successfully protect the privacy of its users. Monero has also gained quite a reputation for its focus on anonymity. Its network uses the same blockchain tech that Bitcoin was built on, but Monero also quickly moved to adopt some privacy-enhancing features as a mandatory requirement in order to protect the identity of its users. This is achieved by using ring signatures in order to effectively prevent anyone from accessing the details of the sender, the receiver, or the transaction itself. Finally, Zcash has made waves as an anonymous cryptocurrency success story lately. Using a novel type of cryptography that is based on zero-knowledge proof, called zk-SNARKs, it can hide every detail from prying eyes and show only the time that a transaction was carried out. Zcash’s tech is so interesting that the altcoin has even received a vote of confidence from controversial privacy advocate Edward Snowden.
If you are looking to invest or trade in cryptocurrencies, either as a business or as an individual user, then turning to anonymous altcoins could help greatly enhance the privacy and security of your transactions.