Bitcoin and Cryptocurrency
The first cryptocurrency launched in 2009 was called Bitcoin, from which many other cryptocurrencies started to appear. Bitcoin’s design attempts to provide some level of “pseudonymity” by not directly publishing the identities of the participating parities. Every user interacts with the network by establishing a public address that acts as a “pseudonymous identity”. In practice, there is no bound on the number of addresses a user can create; therefore, there exists no single address a user can be related with (Genkin, 2018). However, unlike a centralized transaction where the source of the original funds cannot be determined, there is a way through blockchain to determine all transaction information. This is an easy way for unscrupulous people to find out pertinent details about the payer or payee and take advantage.
International transfer transactions provide a secure and safe network to conduct business that takes the time to confirm it is a legitimate deal. With cryptocurrency, the transaction does not go through the process of authentication and takes just seconds to complete. The fees are low and the privacy of the transaction is appealing. By cutting out the middleman in the payment processing market, cryptocurrencies are causing a huge disruption to the global payment system. One of the reasons for the centralized payment processing protocol is to prevent funding for money laundering, terrorist activities, and illicit trade in drugs and ammunition. With cryptocurrencies, it becomes that much harder to trace transactions and ascertain the identities of the participants. Central banks and other financial institutions seem to have no control over its operations. In September of 2017, Christine Lagarde, head of the International Monetary Fund (IMF) warned that cryptocurrencies have the potential to disrupt the Central Banking system and to revolutionize the concept of money (Mission, 2018). Because countries all over the world are dealing with cryptocurrency, developing their own and trying to create laws to regulate it, there is even more of a concern regarding the protection of privacy. (Pham, 2017)
Since the beginning of this year alone, there has been an estimated 1.1billion dollars in theft of cryptocurrency. Criminals are getting bolder and are going for bigger payouts. “There are now an estimated 12,000 marketplaces and 34,000 offerings related to crypto theft for hackers to choose from”. In regard to this type of attack, no country seems to be immune, “The United States was the most vulnerable country, with 24 crypto-related attacks. China was next with 10, and the U.K. came in third with eight” (Rooney, 2018). Because each country is making their own regulations or have not caught up with technology it is an issue that will persist.