Did you know that cryptocurrency has three layers of security?
– The three hierarchical layers of security are coins or tokens, exchanges and wallets.
– Anyone who can exploit flaws in the protocol will hurt the whole network.
– In exchanges, credibility and trust are important.
There are two types of currencies in the first layer of security; coins and ICO-issued tokens.
A cryptocurrency protocol’s security can be compromised when it could be centralized, like Bitcoin.
The security of tokens is based on the parent cryptocurrency and the smart contract code.
Meanwhile, for the second hierarchical layer which is “exchanges,” it’s security is basically based on the credibility and the trust given to third party web services outside of the blockchain.
In fact, there have been many reported security breaches on the exchanges level.
For example, it has been reported that on February 2018, around $195 million worth of cryptocurrency has been stolen by hackers via BitGrail.
Read more about the article written by Ivan Novikov at – https://www.forbes.com