Despite the latest technology, the world has not yet cracked the code for online privacy and security. But that’s not the only big problem we need to worry about.
Hackers and robbers are deceiving innocent users into disclosing their personal information as society becomes increasingly digital – and virtual currencies play a role in all of this.
Cryptocurrencies broke records in 2022, when the market crossed $ 2 trillion for the first time.
And while current investors have taken this for granted, it has made others more cautious.
Why? Because as the asset class grows, it becomes more attractive to malicious actors. And to prove this, you only need to look at the growing number of users who are targets of cryptocurrency robbery.
The big question is this: If these crimes against individuals are so dangerous and likely to increase as the market grows, why does the outside world still ignore the value of privacy? The answer is a lack of clarity about why security and privacy are important – and how they are interconnected.
Let’s imagine that an investor has a significant cryptocurrency – 50 BTC – that has $ 30,000 per coin worth $ 1.5 million.
Their wallets would inevitably be the target of hackers and robbers, which is why privacy is so important. No one needs to know that millions are stored in that investor’s wallet.
Security is key to increasing adoption rates, but it is often overlooked. Precautions and strong measures are needed to give investors a sense of privacy as security – and to prove to newcomers that digital assets have value over fiat currencies.
Related: Identity is the antidote to DEX’s regulatory problems
History of cryptographic privacy
A few years ago, the world went through a currency boom in privacy. It was 2016 and 2017 – a time when this was new and unlike anything most of us had seen before.
This popularity was quickly overshadowed by decentralized finance (DeFi) and smart contracts. The attention was so important that the world began to recognize ingenious agreements as a claim and left “anonymous trade”.
Out of the box, smart contracts are not confidential, which means everyone can access and view all the information sent and stored using this method. And while they are secure, their information is embedded in the blockchain forever.
Around the same time, the development of Lightning Network, Layer 2 payment protocols was implemented to improve transaction speed, and Taproot, an update that gathered multiple signatures and transactions to facilitate transaction verification, was traced to significantly improve Bitcoin privacy.
Another factor is that the world as a whole misunderstands “privacy technology” as an obstacle to the stability of charges with the size and effectiveness of a smart contract, which can only be described as a compromise.
Few people understand the importance of privacy for assets in cryptocurrencies and even fewer realize how much more is at stake.
Related: Autonomy, Supervision, and Identity – How Supervisors Misunderstood
Why privacy equals security
As cryptocurrency has increased, the regulation on stock exchanges has become much stricter, especially with regard to the retention of identification data, including many addresses.
Unfortunately, this creates a single failure point – leading to significantly more reported cases of burglary and data leakage. These negative results are based on the fact that a regulation aims to find opponents on a specific user list and a user list that is not intended to exist on the customer list of an external opponent.
Businesses that can not afford to run a business are too busy complying with regulations that check user IDs and do not pay the cost of storing user IDs securely.
The accompanying concern comes down to vulnerability in the design of replacement for internal leaks. In a cryptic context, even one bad actor, among the “N” number of innocent individuals, can affect security and, consequently, privacy.
As another big factor, blockchain analysis and other tracking techniques have proven to be a powerful game changer in capturing former perpetrators of old hacking cases. Unfortunately, despite good intentions, these same measuring devices have the potential to help facilitate targeted attacks when placed in the wrong hands.
In this example, privacy, the key differentiation of distributed assets, is quickly eliminated, which underlines the purpose of basic infrastructure.
Related: Necessary – Large-scale educational project to combat burglary and fraud
To present arguments for cryptography
Privacy concerns are not new, which is why some technologies have attracted attention for not allowing privacy to interfere with scalability – namely the Lightning Network.
In fact, Lightning Network assumes that users are online and can communicate with participants based on online protocols. The process effectively ensures that the standards and privacy are harmonized.
Together, the online premise, when combined with zero-knowledge proof, makes it possible to enforce successful online communication, an opportunity that can be extended in the Ethereum-type smart contract. The belief is that if privacy can be effectively linked to a smart deal, users of cryptocurrency will soon recognize the importance of privacy.
This article does not include investment advice or advice. Every investment and trading business involves risk and readers should do their own research when making a decision.
The views, thoughts and opinions expressed herein are the sole responsibility of the authors and do not necessarily reflect or represent the views and opinions of the Cointelegraph.
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