Welcome to our “Do You Speak Crypto” series!
At DIFX, we’re constantly looking for ways to raise awareness and improve knowledge within the crypto industry to lower the barriers to entry and drive mass adoption. Therefore, we’ve prepared a series of articles for you in which we’ll discuss common terms in different sections of the blockchain and crypto industry together.
So without further ado, let’s begin our first episode!
Episode 1: Crypto Security
It was just a few days ago that yet another crypto hack made the headlines. This time, it was Beanstalk’s turn to lose more than $180 million in just a few seconds. And the truth is, it’s not even surprising anymore; a trillion-dollar industry can be attractive to both investors and criminals.
With crypto security becoming more important than ever, let’s go through some of the most common security terms together:
1. 51% Attack
As a distributed network, the future of a blockchain system depends on the support of the majority of network members.
A 51% Attack involves a situation when a single entity manages to take control over more than 50% of the network. This allows the attacker to control and run the network as they pleased.
2. Double Spending
In a cryptocurrency network, a successful 51% attack allows the attacker to modify the transactions stored in the blockchain. Blockchain participants (nodes) use the transaction history to verify the ownership of coins. By modifying or removing this information, the attacker can spend the same coins more than once.
Cryptography is a field of mathematics that improves the security of data by encrypting them. Cryptocurrencies use complicated cryptography techniques to protect the information stored on the blockchain and authenticate transactions.
4. Public & Private Keys
In simple terms, public and private keys are used for encrypting and decrypting sensitive data. The sender can encrypt sensitive information using the receiver’s public key. That way, the encrypted data can only be opened by the receiver using the corresponding private key.
5. Digital Signature
A digital signature is the cryptographic version of regular signatures. It’s created using the user’s private key and can be verified by the corresponding public key. Cryptocurrencies use digital signatures to ensure that only the true owner has the ability to transfer or spend funds.
6. Seed Phrase
Seed Phrase or Recovery Phrase is a group of words (12 or 24) generated by your cryptocurrency wallet. Using your seed phrase, you can easily access and spend your crypto so it’s crucial to protect it with utmost care.
Two-Factor Authentication (2FA) requires you two provide more information alongside your password to gain access to your funds. Most crypto platforms offer this feature to increase the security of your funds, so make sure to enable it.
Malware is any kind of malicious software or application that tries to steal your sensitive information or cause damage to your device. Read our article to learn more about common malicious applications in the crypto space.
9. Air Gap
An air gap is a security measure that ensures a device is physically isolated from the outside world. An air-gapped device has no access to the internet or any other network. This protects the data against a wide variety of attack vectors. Cold storage, like hardware wallets, is a good example of air-gapped devices.
10. Security Audit
A security audit refers to the process of analyzing the underlying codes of a platform, smart contract, or blockchain to measure their strength against cyberattacks and technical failures.
It’s recommended to always opt for companies that have conducted a full security audit at least once.
To ensure the full security of users’ assets, DIFX had its platform audited by Dedaub, a leading cybersecurity company with a focus on blockchain security.
Didn’t find the terms you were looking for? No worries. Let us know in the comments so we can cover it for you in our next episode.
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