Connect with us

Crypto

Cryptography: Know the science behind keeping your cryptocurrency transactions secure

Published

1 year ago

on

Cryptography: Know the science behind keeping your cryptocurrency transactions secure

Dubai: If you’re new to cryptocurrencies, you may have had your doubts when stashing a small portion of your savings in an investment that isn’t tangible or physically visible. But knowing how your crypto transactions are kept safe from fraudsters can help influence your investment decisions.

“The internet has created a digital economy in which countless transactions, or simple transmissions of data from one party to another, take place every day. Cryptography is a natural fit in building a digital currency,” explained Brian Deshell, a UAE-based cryptocurrency trader and analyst.

“Different cryptocurrencies use different configurations of encryption methods to achieve their stated purpose, which is to grant various levels of transaction and user anonymity. Cryptography is the science of hiding information in plain sight, in order to conceal it from unauthorised access.”

Advertisement

Simply put, what is cryptography?

Cryptography is a technique of storing and transmitting data (financial and other information related to your identity) in a way only those for whom it is intended can read and process it. Apart from keeping electronic transmissions or transactions safe, it also makes online portals secure.

For an online portal to be secure all of the data transmitted between the computers where the data is kept and where it is received must be encrypted. Due to the large number of transactions on the internet, cryptography is what encrypts and ensures the security of your transactions.

In order to keep digital currencies secure, cryptocurrency users are also asked to use a personalised crypto wallet with a ‘private security key’, a secret number used to send encrypted messages using cryptography.
Advertisement

How cryptography secures crypto transactions

In recent years, digital transactions are made secure with the technology of ‘blockchain’, i.e. a highly-cryptic digital ledger of transactions. It is also the central technology behind digital assets like cryptocurrencies, but what makes this work is its cryptic nature, which comes from cryptography.

“Cryptography allows you to have confidence in your electronic transactions involving your digital currencies. This is integral to getting your money back on time, an overcast to any investment you make,” said Brody Dunn, a UAE-based investment advisor at a wealth management firm.

Advertisement

“This is the primary reason why encryption is used in electronic transactions to protect data such as account numbers and transaction amounts, digital signatures replace handwritten signatures or credit card authorizations, and public-key encryption provides confidentiality.”

Cryptography lowers cost of having middle-men

So, cryptography essentially helps keep information regarding a transaction secure, and since a blockchain is distributed to all users of a cryptocurrency, information regarding transactions is essentially tamper-proof.

Advertisement

Additionally, using cryptography allows for transactions without the need for an intermediary, like a bank, broker or any financial institution, reduces transaction costs, meaning it enables you to go ahead and directly make a transaction by yourself without shelling out much money to middle-men.

“Without cryptography, hackers can easily access your brokerage accounts and steal money. But with time stamping, a cryptographic technique that can certify that a certain electronic transmission was delivered at a particular time, it gets very hard for hackers to tap into,” added Dunn.

CRYPTOCURRENCY
Cryptography allows you to have confidence in your electronic transactions involving your digital currencies.

Drawbacks to use of cryptography in e-currency

Advertisement

In general, cryptography is an important way of achieving data confidentiality, user authentication and ‘non-repudiation’. However, there are some costly drawbacks to using cryptography to encrypt cryptocurrency transactions.

What does ‘non-repudiation’ mean in cryptography?

‘Non-repudiation’ ensures no party can deny it sent or received a message via encryption and/or digital signatures or approved some information. It also cannot deny the authenticity of its signature on a document.

Advertisement

In order to keep digital currencies secure, cryptocurrency users are also asked to use a personalised crypto wallet with a ‘private security key’, a secret number used to send encrypted messages using cryptography. However, losing the key to your wallet could mean losing funds, warned Deshell.

“As cryptography is a complex computing function, encrypting large amounts of data about transactions requires a lot of electricity. This is why ‘Quantum’ computing – which is far more powerful than more traditional computing — is being developed for commercial use,” added Deshell.

“‘Quantum’ computing may eventually be required to break the current encryption methods used in cryptocurrencies, and this may not only deem traditional cryptographic transactions as defunct, it will raise the cost of transacting cryptocurrencies in the future.”

Advertisement
Blockchain
Cryptography is an important way of achieving data confidentiality, user authentication and ‘non-repudiation’.

Key takeaways

As the amount of information and communication expands exponentially in the digital world, according to industry experts, cryptography is an important underlying field of study keeping it all safe. But how useful are they when buying or selling cryptocurrencies?

“Apart from securing the communication in the presence of third parties, cryptography has many applications in end-to-end encryption of digital currencies, which is the primary reason why a non-tangible investment asset is kept secure,” added Dunn.

Advertisement

“As this crypto science has proven its use cases, there are also ways to invest in its development beyond cryptocurrencies, as more and more businesses in recent years are making use of the technology to keep their various assets and day-to-day operations secure.”

So, instead of only chasing cryptocurrencies to reap the financial benefits of this credible science, Dunn advised how investors can stand to benefit by investing in companies that use such technologies to build financial products and services.

Advertisement
Related Topics:
Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Crypto

Crypto Market Boredom: Bitcoin & Altcoins See Volume Crash

Published

5 hours ago

on

January 14, 2025

By

Crypto Market Boredom: Bitcoin & Altcoins See Volume Crash

On-chain data shows the cryptocurrency traders have hit the snooze button as Bitcoin and other assets have witnessed a plunge in volume.

Bitcoin & Altcoins Have Seen A Trading Volume Crash Recently

According to data from the on-chain analytics firm Santiment, trading volume has seen a slowdown in the cryptocurrency sector during the past week.

The “trading volume” here refers to an indicator that keeps track of the total amount of a given asset that’s becoming involved in trading activities on the major exchanges. When the value of this metric goes up, it means the investors are participating in a higher amount of activity related to the coin. Such a trend implies interest in the asset is on the rise.

On the other hand, the indicator observing a decline suggests the traders may be starting to put their attention elsewhere as they are taking part in a lower amount of activity.

Now, here is a chart that shows the trend in the combined Bitcoin trading volume for four different segments of the digital asset sector:

Advertisement
The value of the metric appears to have gone through a decline for all of these groups | Source: Santiment on X

In the above graph, the four sides or segments of the cryptocurrency market displayed are: Memecoins Top 6, AI & Big Data Top 6, Layer 1 Top 6, and Layer 2 Top 6.

“Layer 1” assets refer to those that circulate on blockchains that handle their own security and aren’t built on top of another ecosystem. Bitcoin and Ethereum are the most prominent examples of coins of this type. The coins that aren’t on primary networks, like Polygon (MATIC) and Arbitrum (ARB), are termed Layer 2.

From the chart, it’s apparent that the six largest coins for both of these categories have seen a sharp decline in their trading volume recently. Segments like meme-based tokens and AI-related coins have also noted cooldowns of their own at the same time.

Back in November and the first half of December, the volume was high across the market as traders made a large number of moves during the Bitcoin bull run hype. It would appear, though, that the recent bearish shift has damaged the investor morale.

Advertisement

After the latest continuation of the decline in the indicator, trading activity in the market has slumped to the lowest level since the 4th of November, a day before the presidential elections in the US.

Generally, the market tends to see volatility when a large number of traders are participating in trading activity, as it’s their trades that fuel price moves. Since the trading volume has slumped across the cryptocurrency sector recently, it’s possible that Bitcoin and others might see a state of calm in the near future.

The low activity may even be considered a sign that there is FUD in the market, which is something that has facilitated bottoms in the past.

BTC Price

At the time of writing, Bitcoin is trading at around $90,700, down almost 8% in the last week.

Bitcoin Price Chart 

Looks like the price of the coin has been going down over the past day | Source: BTCUSDT on TradingView

Featured image from Dall-E, Santiment.net, chart from TradingView.com

Advertisement
Continue Reading

Crypto

Congressman Who Wanted Airport Named After Trump Buys Bitcoin, Solana, XRP Token Ahead Of Inauguration

Published

13 hours ago

on

January 13, 2025

By

Congressman Who Wanted Airport Named After Trump Buys Bitcoin, Solana, XRP Token Ahead Of Inauguration

A member of Congress disclosed buying three cryptocurrencies in December, as the sector gets ready to welcome in a pro-cryptocurrency White House administration.

What Happened: With many cryptocurrencies hitting new all-time highs after Donald Trump’s 2024 election win, members of Congress like Representative Guy Reschenthaler (R-Pa.) are adding crypto to their portfolio.

According to Benzinga’s Government Trades page for Reschenthaler, the Republican Representative disclosed the trades recently in one filing.

Here are the cryptocurrencies purchased and the dates the trades were made:

  • Dec. 11: $1,000 to $15,000 Solana SOL/USD
  • Dec. 11: $1,000 to $15,000 XRP Token XRP/USD
  • Dec. 23: $1,000 to $15,000 Bitcoin BTC/USD

The transactions are the first disclosed by Reschenthaler since he joined Congress in 2019.

Did You Know?

Advertisement

Why It’s Important: Reschenthaler, 41, has not been as vocal about cryptocurrency as other members of Congress have been. The purchase could be due in part due to his belief that a Trump presidency will be bullish for the cryptocurrency sector.

Here is a look at how much the Congressman paid for the cryptocurrencies versus where the price is today:

  • Solana: 12/11 range $211.99 to $230.51, today $175.83
  • XRP: 12/11 range $2.24 to $2.47, today $2.45
  • Bitcoin: 12/23 range $92,403.13 to $96,416.21, today $91,836.61

Two of the Congressman’s purchases have lost money while the purchase of XRP has turned into a winning trade. Benzinga will closely monitor the trading activity of members of Congress when it comes to cryptocurrency in the coming months.

Last year, Reschenthaler proposed renaming the Washington Dulles International Airport, which is located 25 miles from Washington, D.C., to the Donald J. Trump International Airport.

“In my lifetime, our nation has never been greater than under the leadership of President Donald J. Trump,” Reschenthaler said at the time. “As millions of domestic and international travelers fly through the airport, there is no better symbol of freedom, prosperity, and strength than hearing ‘Welcome to Trump International Airport’ as they land on American soil.”

Read Next:

Advertisement

Image: Shutterstock

Market News and Data brought to you by Benzinga APIs

© 2025 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Advertisement
Continue Reading

Crypto

VT Markets Anticipates Cryptocurrency Growth from Policy Changes and Market Momentum in 2025 Q1 Economic Outlook

Published

21 hours ago

on

January 13, 2025

By

VT Markets Anticipates Cryptocurrency Growth from Policy Changes and Market Momentum in 2025 Q1 Economic Outlook

HONG KONG SAR – Media OutReach Newswire – 13 January 2025 – VT Markets, an award-winning financial services provider, today releases its 2025 Q1 Economic Outlook. The report highlights how the dual tailwind of favourable policies and market dynamics will propel the cryptocurrency sector into a new era of mainstream adoption. The report also underscores the transformative strides achieved by cryptocurrencies in 2024, which sets the stage for further growth in the upcoming year.

2024 As A Landmark Year for Cryptocurrency

With the conclusion of the 2024 U.S. Presidential election, cryptocurrencies have ascended from niche assets to mainstream investment products. Political developments, particularly arising President Trump’s re-election and his pro-cryptocurrency stance, acted as the main catalyst for this phenomenon. Participants observed Bitcoin’s price surging by over 40%, crossing $108,000 by year-end anticipating dovish policy shifts and renewed investor confidence towards the digital asset.

Key regulatory appointments, such as naming crypto advocate Hester Peirce as SEC Chair, signalled to the market a shift towards a more favourable regulatory framework, instilling optimism in institutional and retail investors alike.

The Rise of Spot Bitcoin ETFs

Advertisement

In early 2024, the U.S. SEC approved multiple spot Bitcoin ETFs; a significant breakthrough for the cryptocurrency industry then. By year-end, assets under management for these ETFs grew from $28.8 billion to $110 billion. Among them, BlackRock’s IBIT ETF stood out, achieving record-breaking $30 billion AUM in under 300 days.

This development not only validated cryptocurrencies as a mainstream investment class but also paved the way for wider institutional participation. The integration of cryptocurrency into traditional finance is seen as a key step toward standardisation – an issue which has plagued the industry since its inception.

Liquidity and Risk Appetite Fuel Growth

Macroeconomic conditions, including the Federal Reserve’s shift towards an easing monetary policy, contributed to increased market liquidity and higher risk asset valuations. Cryptocurrencies, known for their high-risk, high-reward profile, inevitably emerged as a preferred choice for portfolio diversification, further driving their adoption and price momentum.

2025 Will Be A Year of Regulatory Clarity and Technological Innovation

Advertisement

Looking ahead, the cryptocurrency sector is poised for greater regulatory clarity and broader market acceptance globally:

United States: Expected legislation on stablecoins and other crypto assets will a establish a clear regulatory environment.

European Union: The upcoming implementation of the Markets in Crypto-Assets Regulation (MiCA) will enhance transparency and compliance.

Asia-Pacific: Singapore and Hong Kong are set to strengthen their positions as regional crypto hubs, promoting Web3 development and reopening licensing opportunities for exchanges.

Emerging Markets: Countries like Brazil, the UAE, Australia, and South Africa are advancing efforts to legitimize cryptocurrencies, potentially becoming regional leaders in the sector.

Advertisement

A New Era for Mainstream Cryptocurrency Adoption

The VT Markets’ Research Desk suggests that the confluence of supportive policies, transparent regulations, and robust market conditions will accelerate the mainstream adoption of cryptocurrencies.

They believe that this transition from speculative assets to recognised investment products will be a pivotal moment in financial innovation.

https://www.linkedin.com/company/89310903/admin/feed/posts/

https://www.facebook.com/VTMarketsCN

Advertisement

https://www.instagram.com/vtmarkets/

Hashtag: #VTMarkets #CFDs #CFDsbrokers #cryptocurrency #Bitcoin #bitcointrading

The issuer is solely responsible for the content of this announcement.

Advertisement
Continue Reading
Advertisement

Trending