Security of Crypto Investment
What precedes crypto investments?
Cryptography is an indispensable process in the development and running of a cryptocurrency. Cryptology is the core subject governing the principles, mathematical logic, functions, and other theoretical aspects of cryptography.
The complete cryptocurrency ecosystem runs under the reign of complex principles, logic, functions of cryptology, and more complex dynamics and governance of cryptography.
Therefore, it is not wrong to say that cryptology and cryptography precede cryptocurrencies that create investment instruments for investors.
Without cryptology and cryptography, cryptocurrencies would not have existed.
Let's see all the ingredients that are essential for the existence of the crypto world. We assume these as automatic and trivial, but those technological elements are the building blocks of the magic of cryptocurrency.
The Internet is the crucial information highway for whatever we do online!
So, don't forget the magical presence of the Internet. Without it, no online communication by computing would ever be possible.
Public Key Cryptography
Image 01: This graphics has been released into the public domain by its author, KohanX, at English Wikipedia.
The concept of Public-Key Cryptography (PKC) is simple, also known as asymmetric cryptography. It is a cryptographic system that uses one pair of keys, a public key (known or public to others) and a public key (private or known only by the owner).
The generation of such public and private key pairs depends on specific cryptographic algorithms based on mathematical operations known as one-way operations. The functions that generate one-way operations are called one-way functions. The private key must be kept secret or confidential to maintain adequate security, whereas the public key may be distributed to others without compromising security.
Image 01 is a diagram of the well-known key exchange scheme of Diffie–Hellman key exchange, where each of the two persons generates a public/private key pair and distributes their public keys. After obtaining an authentic (n.b., this is very critical) copy of the public keys from each other, both Alice and Bob can separately compute the shared secret data in their offline computers. The shared confidential data can be used, for instance, as the key for a symmetric cipher which will be, in essentially all cases, much faster.
Incidentally, Whitfield Diffie is also working to strengthen humanity around the globe. In 2012, I tried to contact him when he visited our country on an invitation.
Blockchain, Distributed Ledgers, and Distributed Computing
Image 02: Photo by Hitesh Choudhary on Unsplash
Blockchain is a list of records or ledgers called blocks that continually grow and are linked together using cryptography. Each record or block in the list contains a cryptographic hash of the previous record or block of the same list, a timestamp, and transaction data, generally represented as a Merkle tree.
Since the records or blocks/ledgers are stored distributively in a computing infrastructure network, all blockchains are called distributed ledgers, and the associated technology is called distributed ledger technology.
The writing of the records and cryptographic hash computation is executed simultaneously in the network computing infrastructure. Hence, it is called distributed computing.
There can be distributed ledgers that don't involve any blocks. In other words, there can be block-less distributed ledgers, such as directed acyclic graphs (DAG). One example of a block-less distributed ledger is IOTA.
Private Key-Loss Conundrum of Public Key Cryptography
Image 03: Photo by George Becker from Pexels
If one loses the private key in public-key cryptography, all the cryptographic data become irrecoverable or lost forever. It holds for distributed ledger technologies because the cryptographically assigned owner cannot unlock the cryptographic data without the private decryption key. This phenomenon is a real problem for all public-key cryptographic or asymmetric cryptographic systems. It is typically termed as the Private Key-loss Conundrum.
In the case of cryptocurrencies, the owners own the cryptocurrencies by private keys. If the owners lose the private keys, the associated cryptographic data assets, i.e., the cryptocurrencies, are lost.
Private Key Protection is Paramount for Cryptos
Image 04: Photo by cottonbro from Pexels
A cryptocurrency wallet is essentially decentralized and associate specific private keys and additional mnemonic phrases. If the owner loses the private key, they may create a duplicate copy of the wallet using the mnemonic phrases. In certain situations, the duplication of the wallet may yield errors.
Storing the cryptocurrencies in a hardware wallet or using a hardware token is often an alternative safeguard to the private key-loss situation. But, if the hardware device is lost or stolen, all the associated crypto assets are lost forever.
Investment Protection and private key protection are interrelated
Image 05: Photo by cottonbro from Pexels
Investment protection is always a concern of the investors. There are hot discussions about how the crypto investment would bring profit. But, there is hardly any discussion about how the crypto assets would be protected from accidental or careless losing of the private keys.
Protection of the private keys and protection of the crypto investments are interrelated. Every cryptocurrency holder knows what would happen if they lose or misplace the private key. The in-browser crypto wallets are additionally prone to stealing or hacking, such as in our in-browser wallets in read.cash and noise.cash.
The mnemonic phrases may be an interim solution to duplicate the crypto wallets, failing in certain substances. Otherwise, there is no sure shot solution to the problem of the Private Key-loss Conundrum. Therefore, it is a golden rule that private keys must be stored and saved in well-protected safe vaults. Unless a new and secure solution is invented, the security of cryptocurrencies will remain a risk for the investors.
Computers and the Internet were the ultimate game-changer
Image 06: Photo by Fox from Pexels
After discussing all the simple know-hows of cryptology, cryptography, blockchain, distributed ledger technology, distributed computing, and the private key-loss problem, I mention the Internet. The basic science and technology of cryptology and cryptography were developed long ago. The military departments utilized it during the first and second world wars.
Later, computing machines were developed. The fruits of cryptology and cryptography matured when computational machines evolved into computers - first the mainframes, then desktops, laptops, and now the handheld devices. Gradually, the Internet changed the scenery altogether. The networks of computers entwined the globe, and it opened the possibilities for transferring and processing data remotely.
Image 07: Photo by Valentine Tanasovich from Pexels
The computation of cryptographic hashes and solving crypto puzzles need more fast processing power. There comes the necessity of developing very large-scale integrated (VLSI) architectures and hardware programming languages, such as VHDL. The VLSI architectures can run computation-intensive cryptographic tasks faster than traditional computer processors and graphical processing unit (GPU) processors.
Bringing it altogether
A cryptocurrency is not magic that came like a bolt from the blue. Strong research developments in Science, Technology, Engineering, and Mathematics made it possible to get the Internet and cryptocurrency.
Cryptology and cryptography are the backbones of all cryptocurrencies. Unless there is tangible innovation in cryptology and cryptography, there would hardly be any scope of improvements for the cryptocurrency ecosystem.
Until today, private keys are the most precious secret any cryptocurrency investor/owner must protect throughout their investing lives.
Thus, the security of crypto investment is preceded by the securities provided by computational applications of cryptology, cryptography, blockchains over the Internet utilizing high-end computing architectures.
The better an investor learns how to protect and preserve the private keys, the better he/she can protect their crypto assets.
You might be having enough funds to invest in cryptocurrencies. If you don't have proper technical knowledge on protecting and preserving crypto assets, you may not be able to retain ownership of your investment due to technological lapses.
A few first investors of Bitcoin owned one thousand plus Bitcoins. But, they somehow misplaced the private keys and lost all the high-cost crypto assets due to a lack of seriousness or knowledge.
Postscript
I am from STEM - Science, Technology, Engineering, Mathematics. I develop cybersecurity, data privacy solutions, especially authentication technology and password security.
Some of my technologies may directly apply to solve the private key-loss problem of any blockchain application, including cryptocurrencies.
I wish to get your frank opinions and counter views.
Cheers!
Lead Image: I created the animation with my texts, Photos by Roger Brown from Pexels and cottonbro from Pexels. Sources of all other images are mentioned below the respective images.
Disclaimer: All texts are mine and original. Any similarity and resemblance to any other content are purely accidental. The article is not advice for life, career, or business. Do your research before adopting any options.
Unite and Empower Humanity.
I am also on noise.cash ... click the link if you are there.
December 31, 2021
