Cryptocurrencies and other blockchain technologies are often blindly praised as a secure technology that should, according to some, be implemented anywhere where security, immutability, and transparency are important.
At the same time, there’s a lot of suspicion when it comes to this new blockchain-powered payment system, especially among the older population. In this brief guide, we aim to set the record straight by looking at both the intrinsic security of crypto casinos as well as the vulnerabilities.
How Crypto Casinos Use Blockchain Technology
While blockchain technology can be used in many more ways than through payments, when we’re talking about a crypto casino, we’re generally only talking about one that lets users make deposits and withdrawals with cryptocurrency.
Since payment can be made anonymously and without giving out sensitive bank information, crypto casinos have largely been embraced by the casino community. Fees also tend to be low, and transactions often go through within minutes.
Why Blockchain Technology Is Typically Considered Secure
Blockchain-powered technologies such as cryptocurrencies can be seen as secure for a number of important and valid reasons. Three main elements contribute to the security of cryptocurrencies: decentralization, cryptography, and consensus.
Decentralization means that important data, such as transaction history and more, is not stored in one central location. Instead, it’s distributed over a network of computers, called nodes. This minimizes the chances of failure and attacks, as only one so-called node getting damaged or altered wouldn’t collapse the whole system.
Cryptography refers to encrypting and decrypting data through mathematical formulas and computations, adding an extra layer of security. Cryptography helps to ensure data integrity and validate that the authorized actor is calling for the changes in the blockchain.
Finally, a consensus mechanism helps ensure that no unauthorized transaction goes through by requiring all the nodes to agree on the validity of a transaction. There are a couple of different algorithms used for this, namely PoW and PoS.
Since all transactions are stored as data blocks on the network of nodes, the history can be traced securely, and it’s pretty much impossible to tamper with what’s been written, as all the blocks are connected in a chain. Many blockchains are public ledgers, which means an added layer of transparency. Changes and transactions can then be viewed by anyone, although you won’t see names of personal information, but wallet addresses.
The Unique Risks and Challenges with Crypto Casinos
The paradox of cryptocurrencies is that the biggest security risk is also what’s seen as the biggest advantage for many – the lack of a central authority. While banks can often get back the money lost to scammers and phishing attacks, that just isn’t possible when we’re talking about blockchain technology. If the money is sent, it’s gone – only the person who has received it can send it back.
Due to the irreversible nature of cryptocurrencies, those falling victim to phishing scams are not going to get their money back, nor is there an authority to request help from. This means that checking the security of an online crypto casino before any transactions are made is especially important.
But it isn’t just scams or phishing attacks that can cause problems. Tiny mistakes made by the sender, like accidentally adding a letter at the end of a wallet address, will cause the money to disappear forever. Money sent to a non-existent address will effectively be gone, also known as burned.
Besides that, blockchain technology can be vulnerable to exploits in smart contracts. Smart contracts are self-executing contracts, and like any code, they can have bugs or other vulnerabilities. If someone manages to exploit this, it can result in massive losses that are very hard to recover.
A remarkable instance of this happening was an attack on Ethereum in 2016, where hackers stole a third of the DAO’s funds through exploiting smart contract vulnerabilities.
Final Verdict – Is Blockchain a Pro or Con for Security?
If done right, the introduction of blockchain technology can be a good thing in creating higher security and preventing tampering by third parties.
But it requires that the individuals using the cryptocurrencies are not only tech-savvy, but also personally vigilant to threats such as social engineering and phishing websites. And, of course, it’s important to check the authenticity of an online crypto casino. Anyone can ask for money to be sent to a wallet, which also means that criminals can easily set up crypto wallets without concerns about being caught.
In short, cryptocurrency is intrinsically safe, but not fail-proof. It shifts the responsibility of safety to the user, meaning it can be both an advantage and a disadvantage.
