Bitcoin works through a system in which it’s possible for a group of people to reach a consensus and agree on a single valid history of transactions by including them in the blockchain.
Bitcoin miners are users who seek a business opportunity by purchasing powerful computers to solve complicated mathematical equations through what is known as proof of work.
The miners are responsible for listening to and reporting all transactions that happen on the network. Miners record the transactions by adding them in batches called blocks.
The mining analogy to gold is misleading. The purpose of mining is not to create Bitcoin but rather to process everyone’s transactions and update the database.
Bitcoin is the first successful decentralized digital currency because it was the first to solve the double-spending problem of spending the same money twice.
Double-spend attacks can happen through a 51% attack, where a hacker captures 51% of the hash power of the network. So far no such attack has occurred due to the difficulty of mining, cost of hardware, and electricity required.
Whilst cryptocurrency can be an exciting and rewarding investment, it is vital to have an understanding of web3 security and the measures needed to protect yourself and your fund.
Transparency and Accountability. CertiK KYC provides identity verification for project teams- to help investors make shrewder decisions based on an awareness of web3 security.
Smart Contract Audits. Check out the CertiK Security Leaderboard, which rates and ranks all onboarded projects in terms of their security.
Authentication Methods. In securing your accounts you should set up 2 Factor authentication so that a hacker would need to have both your password and the device to be able to access your account.
Hot and Cold Wallets. People will hold some of their funds on a cold wallet for security, and some on a hot wallet to allow for a smoother flow of funds.
Anonymity and pseudonymity refer to two different ways of obscuring or concealing a person’s identity. Within De-Fi, the terms mean a way of protecting their identity and concealing their transactions.
In the context of blockchain security, pseudonymity means that whilst the identity of the person making transactions is unknown, all of the transactions that they make can be linked to the same pseudonymous identity. By contrast, anonymity means that none of the transactions or activity conducted on the blockchain or on exchanges can be linked to one user, pseudonymous or otherwise.