Aspects of Bitcoin Transaction Threats

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Table of Contents

Introduction
Discussion
Conclusion
References

Introduction

With the advancement of technology, online transactions have been on the rise. These include Bitcoin, a digital currency with no physical existence. When one engages in an online transaction, one expects that their information is secure and confidential. However, the increment of such systems has opened chances for information attacks by malicious users (Bourgeois et al., 2019). With Bitcoin, various measures have been installed to ensure top-notch information security; however, the mining and transactions are not completely secure, so they may be a target for hackers (Gallaugher, 2015). Therefore, Bitcoin is vulnerable to information security threats such as double spending, distributed denials of service (DDoS), and selfish mining.

Discussion

Bitcoin is vulnerable to double spending, a state where an attacker makes multiple transactions with one Bitcoin. The attacker initiates a transaction with two different receivers without their knowledge. Therefore, the system validates only the first transaction, and all others are disregarded (Gallaugher, 2015). Thus, only one receiver confirms the transaction, and the attacker will have received multiple payments. Such a threat can be addressed by installing ‘observers’ in the network.

DDoS is a common threat with online applications such as Bitcoin wallets owned by clients to manage their transactions and funds. DDoS is an attack that denies access to such applications, affecting transactions and may lead to loss of information (Bourgeois et al., 2019). Thus, it is imperative that the wallets are encrypted and have an offline backup to ensure the information can be accessed even after a DDoS attack.

Additionally, Bitcoin is vulnerable to attack due to selfish mining. In this threat, there are selfish and honest miners. The colluding miners force the latter to make computations on blocks that are not included in the blockchain (Bourgeois et al., 2019). While the honest miners continue wasting their blocks, the selfish ones keep theirs private. However, they eventually reveal them and make more revenue. This can be addressed by improving the Bitcoin protocols to eliminate any success of selfish mining.

Conclusion

Admittedly, Bitcoin transactions, like any other online operations, are susceptible to threats of information security. Such include DDoS, double spending, and selfish mining; however, these can be prevented. For instance, DDoS can be addressed by ensuring that information is encrypted and backed up. Fixing Bitcoin protocols is also essential in ensuring that selfish mining is eliminated. Setting strong passwords can also prevent access to confidential data.

References

Bourgeois, D, Smith, J. L., Wang, S, & Mortati, J. (2019). Information systems for business and beyond. Open Textbooks. Web.

Gallaugher, J. (2015). Information systems: A manager’s guide to harnessing technology. University of Minnesota Libraries Publishing. Web.

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Aspects of Bitcoin Transaction Threats

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