A Taxonomy of Bitcoin Security Issues and Defense Mechanisms

Abstract

Cryptocurrency is a subset of digital currency. When the core building blocks of any digital currency are its cryptographic primitives, then it is called a cryptocurrency. Cryptocurrency lies between fiat money and quantum money. Bitcoin is recent and most popular cryptocurrency which has been in the news for its several advantages over other cryptocurrencies. The whole purpose of bitcoins is to transfer money from one user to another without any restrictions of geographical boundaries and without any authority to keep a check on the transactions. Bitcoin is a new type of money which works on an innovative platform of network distributed across the globe. PoW used in the bitcoin block-chain supplants the trust of bitcoin user in the mathematical equations. The core difference from other cryptocurrencies is that there exists no governing body to manage bitcoins; all the trust is mathematically ensured. Having strength of borderless payments with lowest transaction fees, bitcoin is now used to do financial transactions in more than 20,000 online stores. The government has always been wary of bitcoins. The reason behind this is due to anonymity property, taxation is not possible; another reason is that although the maximum number of bitcoins is fixed to 21 million, there is no way to find out how many bitcoins are in circulation at any point of time and this leads to lack of traceability. So, understanding the security levels of bitcoin is of utmost importance.