The Plain English Guide to: Cryptocurrency

Introduction

There’s a new financial player in town, and it’s unlike anything that’s come before it.

Rather than notes and coins, this particular currency takes the form of 1’s and 0’s – and it’s stored on a hard drive rather than a bank account. We’re talking, of course, about cryptocurrency – and it might not be the first you’re hearing of it this year.

So, if you’re a bit out of the loop on exactly what ‘crypto’ is, and how it might impact you or your business from a cybersecurity standpoint, we’re here to give you all of the facts.

Let’s hit the markets.

What is cryptocurrency, exactly?

If you’d like to stick to dictionary definitions, cryptocurrency is “a digital asset designed to work as a medium of exchange wherein individual coin ownership records are stored in a ledger existing in a form of a computerized database”.

So… what does that exactly mean in plain English?

At its most basic level, cryptocurrency is best described as digital money. It has value because we say it has value – just like a coin, a note, or even an asset like gold or oil. In the case of Bitcoin, the first ever cryptocurrency, the asset also has value because only 21 million will ever be created – but we’ll get to this in a few moments.

Crypto works like a currency because it’s built on technology called the ‘blockchain’. Think of this like a digital notebook which records every single transaction which happens on the network, then asks everyone to double-check the records to ensure they’re accurate. This ledger exists on everyone’s computers at once, so no single entity controls it. In this way, the blockchain is entirely decentralized, making it almost impossible to counterfeit or compromise.

How is cryptocurrency created? And is it even ‘real’?

One of the quirks of cryptocurrencies like Bitcoin is that they don’t simply exist, but instead must be “mined” to become available for trading or holding as an asset.

What is cryptocurrency mining?

In plain English, mining is what powers the blockchain.

The actual mining process is made up of millions of computers all carrying out complex mathematical equations, with the goal of eventually solving one and being “rewarded” with a single Bitcoin. To ensure all 21 million coins are mined at a reasonable rate, these mathematical problems actually get harder as time goes on, meaning it takes longer to produce the coins. At current estimates, the final Bitcoin will be mined sometime around 2045. Until then, computers will be churning away making calculations with the hopes of earning the next coin. However, this takes significant power, so miners often work in “pools”, then share the resultant coins among all participants.

As for the question of ‘are cryptocurrency coins real?’ The answer is actually, yes — at least in a sense.

If you either bought or mined a Bitcoin, you would have to store it in a virtual wallet which has a unique private key. This key represents every coin in the wallet, so if it’s lost, the coins are lost too. In this way, many crypto enthusiasts will hold their digital assets on offline drives called “cold storage”. This also protects them from online cyberattacks which may target crypto wallets.

Bitcoin, Ethereum, and the ever-growing list of ‘altcoins’

While Bitcoin is the first (and most commonly covered) cryptocurrency out in the world, there are actually more than 4000 different currencies in existence.

The existence of these so-called “altcoins” is just one of the reasons that this new asset can be so volatile in the markets, along with the constantly shifting approach to regulation the world is taking.

To give you the inside track, here are the other cryptocurrencies you should be aware of as we (maybe) head towards a more decentralised future:

• Ethereum, introduced in 2015, is more than simply a digital store of value. The blockchain it’s built on is in fact a software platform in itself. Just as the blockchain can be used to store transactions, it can also store data, and it’s this attribute which Ethereum takes advantage of to produce secure platforms for apps.
• Dogecoin, introduced in 2013, is quite literally a joke coin. Based entirely on a meme, it was created by someone who wanted to make fun of crypto, but instead ended up building a digital asset which is still popular today – even with global business leaders like Elon Musk.
• Litecoin is an interesting case because it was essentially the first altcoin. Introduced in 2011, shortly after Bitcoin, it aimed to reproduce the technical setup of its bigger brother, but with faster transaction speeds.

The cybersecurity risks of cryptocurrency

At this point you should be very familiar with the ins and outs of cryptocurrency, so let’s take a look at some of the downsides — especially for businesses.

The single biggest cybersecurity risk posed by the presence of crypto is about one thing: mining.

We’ve covered this in-depth in a previous blog post here at Get Support, but the key point is that there are forms of malicious malware out there which have the sole intention of planting mining software into target computers.

This type of malware is commonly referred to as “cryptojacking”.

Once the malware has been installed — often by way of a Trojan horse attack — the software will surreptitiously begin processing those mathematical calculations we mentioned earlier, then send the responses back to the attacker.

It’s worth noting here that an average office computer won’t have the grunt to make much of an impact when mining, which is why such attacks rely on scale. Essentially, they want to infect as many computers as possible to amplify the processing power and thus boost the prospects of successfully mining a coin, or contributing to a pool to (eventually) grow their pot. The further the attacker’s malware spreads, the more likely they are to make it rich – and that’s a big incentive to keep the attacks going.

How do you protect yourself from bitcoin mining malware? There are a few different ways to avoid these attacks, but the most effective are Endpoint Detection and Response software, as well as regular staff training to prevent the social engineering which leads to malware infections.

Want more plain English IT advice? Talk to Get Support

Whether you’re brand new to the world of crypto or you’re already holding a position in one of these assets, it’s clear there’s more to these digital coins than meets the eye — and that includes business cybersecurity.

If you’re concerned about the IT security of your business, including the hidden threats posed by crypto mining malware, the Get Support team is here to help with our extensive IT support agreements.

To learn more about how we could help keep your business safe in the digital world, call us today on 01865 59 4000 or simply drop your details in the form below.