Can Bitcoin Atom Make Cryptocurrency Transactions More Secure?

The fourth quarter 2017 cryptocurrency run has brought out the crypto-bears in full force. The launch of Bitcoin futures by reputable exchanges like the CBOE and CME has only given bears more opportunity to express their distaste for the up and coming asset class.

One of the oft heard critiques of Bitcoin and cryptocurrencies in general is their propensity for being hacked. A list of the biggest cryptocurrency hacks shows that over $600 million have been stolen from eleven hacks alone. However, a majority of the money that was stolen in these instances was due to cryptocurrency exchanges as opposed to problems with the blockchains themselves.

Examples include the infamous Mt.Gox hack and the August 2016 Bitfinex hack, which resulted in almost $550 million in losses combined. In a more recent example, the South Korea based company Yapian filed for bankruptcy after its cryptocurrency exchange Youbit was hacked (again).

Security breaches

The irony of these hacks is that cryptocurrencies, as decentralized, trustless monies, should be more secure than their fiat counterparts. History has proven otherwise. This is because cryptocurrencies that are traded through exchanges have neither decentralization nor a trustless protocol. Instead, investors rely solely on a centralized authority to secure their investments.

Sensing the need for greater security, Bitcoin Atom (BCA), a SegWit enabled Bitcoin fork, is creating a network that removes the need for centralized parties when exchanging cryptocurrencies.

They plan to do this via atomic swaps, which allow individuals to exchange digital coins directly between different blockchains. Not only will this model bring transparency to cryptocurrency trading, it will also secure the network from centralized parties.

The Greatest Threat Within the Crypto Community

Cryptocurrency exchanges mean well, and undoubtedly none of them enjoy being hacked. Unfortunately, good intentions alone don’t prevent hacks like those described above from happening. The fundamental problem with cryptocurrency exchanges is their centralization. There is one entity that operates the exchange, secures the network, and managers the flow of funds.

Additionally, these exchanges need to be connected to other centralized entities like banks and credit card companies because users must provide financial information when registering an account. This means that when a cryptocurrency exchange is hacked, both crypto and traditional assets are at risk.

The end result is that all users who trade on exchanges rely on them, i.e. trust in them. It is the centralized exchange that stores private financial information and makes a market for cryptocurrencies. When investors use exchanges, they place their full trust in the exchange. Cryptocurrency exchanges are no different from banks that consumers trust to clear transactions, safeguard deposits, and process Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term.

The Greatest Threat Outside the Crypto Community

Cryptocurrency exchanges also open up a way for other centralized authorities to get involved. Many exchanges require users to register a bank account with their newly created account. By connecting the bank account with the exchange, users now have to trust two centralized parties. In some cases, banks delay or even block transfers to exchanges, resulting in a miserable experience for investors.

In other cases, federal authorities and regulators like the IRS order exchanges to turn over user transaction records. Though exchanges can fight governmental overreach, it’s often futile, as government agencies possess much more power. By connecting the crypto world with the fiat world, exchanges often do more harm than good.

How Bitcoin Atom Solves These Problems

By eliminating the need for centralized exchanges by using atomic swaps, Bitcoin Atom will already make cryptocurrency transactions much more secure. What’s more, when transacting directly on the network, users will only have to sign the transactions with their private key, which is never revealed. Thus in contrast to traditional cryptocurrency exchanges, users of the Bitcoin Atom network never have to give up their personal information.

Whereas traditional exchanges request and secure a variety of private data as a part of their verification process, no verification process is necessary on the Bitcoin Atom Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Read this Term. The entire trading process is decentralized from start to finish. Even if the blockchain were compromised, which is nearly impossible as the network runs on a hybrid Proof of Work / Proof of Stake protocol, no personal information would be at risk.

The Bitcoin Atom network is rumored to happen sometime early 2018, and is receiving support from Coinomi. The promise of secure, truly decentralized trading should excite all cryptocurrency enthusiasts.