Decentralized Cryptocurrency Security and Financial Implications

Abstract

The worldwide growth in electronic commerce has led to the emergence of digital currencies, which have been gaining public and research attention as an alternative method of payment. In recent years, Bitcoin has become a global currency with a multibillion USD market value. This is a result of the many attractive features of the currency including its distributed algorithms, cryptography, and incentive-driven performance. This chapter offers an in-depth investigation of the Bitcoin network along with its security and financial implications. All the components of the network are described along with details of the cryptographic foundations of the system. The chapter also describes the security and privacy implications of Bitcoin and proposes methods to minimize their effect. Finally, the chapter discusses the regulatory and financial implications of the Bitcoin network to show how countries around the world are reacting to the widespread use of cryptocurrencies.