A report by a US government research agency raises questions about the decentralized system of cryptocurrency technology.
The report comes as major cryptocurrencies are experiencing massive declines in value and several companies supporting the technology are experiencing business difficulties.
A cryptocurrency is a form of digital money that is not regulated by governments or banks. A computer network records cryptocurrency activity between users. This activity is included in a “ledger” or list known as the blockchain.
Since the blockchain includes a worldwide network of computers, the system is considered decentralized. The blockchain is designed this way to prevent a single person or group from controlling the system.
The new report on blockchain technology was recently published by the US Defense Advanced Research Projects Agency, or DARPA. The agency aims to conduct research and development activities for the Department of Defense.
The DARPA report is called “Is Blockchains Decentralized?” It was completed last year in collaboration with US-based computer security and research firm Trail of Bits.
The study focused on blockchains for the two most popular cryptocurrencies, bitcoin and ethereum. The researchers looked at the level of decentralization available with these systems and examined possible security risks.
The report states that these blockchain systems “unwanted centralizations that could pose security issues for cryptocurrency investors”.
Trail of Bits said in a statement that research has found that some people involved in the blockchain process can earn.unnecessarycentralized control over the entire system.” This type of control allows individuals to “upset characteristics of existing rules regarding the networking process of the blockchain”.
More security risks
In addition, the company said that the encryption system used in cryptocurrency activities, although generally considered secure, “does not guarantee security.” The term encryption refers to changing information from one format to another in order to increase security and prevent attacks.
Specifically, Trail of Bits said that blockchain traffic containing bitcoin is unencrypted. This means “any third party on the network route … he can observe and choose to leave any messages he likes.” Examples of third parties include internet service providers or ISPs, Wi-Fi. access Point operators, or governments, said the researchers.
Another problem discovered in the research, DARPA said, is that 60 percent of all bitcoin traffic moves through just three ISPs. The agency also found that 21 percent of bitcoin computers run an outdated version of the Bitcoin Core software, known for its “security” feature. security vulnerabilities” In June of 2021.
The report also revealed that the number of parties was “necessary”. to ruin “one blockchain” is pretty low – four for bitcoin and two for ethereum.
The risks identified in the report were “poorly identified and often overlooked – even regiment — by those who want cash“In the cryptocurrency business.
The new report comes as bitcoin and other cryptocurrencies struggle to hold their value. Currently, bitcoin is worth around $20,000. It has lost more than 72 percent of its value since reaching $68,991 on November 10, 2021.
Last week, the CEO of one of the largest crypto exchanges, Coinbase, announced that the company will lay off about 18 percent of its employees. Brian Armstrong also warned that a wider recession could worsen the industry’s problems. “A recession could lead to another crypto winter and last for a long time,” he said.
I am Bryan Lynn.
Bryan Lynn wrote this story for VOA Learning English based on reports from DARPA, The Associated Press, Reuters and Agence France-Presse.
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The Words in This Story
unwanted – p. not wanted or planned
unnecessary – p. more than necessary, to an acceptable or reasonable level
upset – v. trying to destroy something, especially an established political system
route – n. a particular road or direction between places
access – n. the right or chance to use or care for something
security bug – n. ways in which something can be easily hurt, affected or attacked
to ruin – v. to interfere with something and prevent it from continuing as it should
regiment – v. to laugh at or make fun of someone
cash – v. make money out of a situation