- 16 Jun 2020
- Reading time
- 3 minutes
We have seen how the Bitcoin system is substantially protected by miners (the computers that process network transactions) that agree on transactions on the shared ledger (the blockchain).
The blockchain is in fact based on proof-of-work which, in order to record (therefore make effective) a certain number of bitcoin transaction operations, requires that "strenuous" work be done first in terms of computational power (Faccini, 2017). This system serves to avoid the problem of double-spending or the possibility that a given user can spend the same bitcoin twice (double-spending).
A potential threat to Bitcoin may stem from the so-called "51% attack", which occurs when an organization manages to control the majority of the network 's mining power. A 51% attack would, in fact, allow the organization to write the order of transactions at will and allow double-spending. It is clear that such an attack would not directly damage the holders of the cryptocurrency, as they would not have stolen bitcoins already in their possession, but would damage the users to whom the bitcoins undermined from the moment of the attack and until its end would be sent.
However, trying to take control of the network with a 51% attack is not a guarantee of success even if you have great computational power at your disposal, not guaranteeing full power on the bitcoin network as the more you go back in transactions on the blockchain, the more the system remains safe against this type of attack. Realistically, therefore, an attacker would be able to modify transactions only in the last blocks.
Relevant regulatory aspects
The following paragraph deals with strictly regulatory aspects. A first difficulty lies in identifying the legal nature of cryptocurrencies, thus making it difficult to identify the applicable legislation.
At the European regulation level, ad hoc legislation has not yet been created. The intention seems to be to evaluate the conclusions of the G20 next March, to develop a common strategy with the other world "powers" in order to regulate the phenomenon in a homogeneous way.
In our country, cryptocurrencies are currently regulated only in relation to the law on the fight against money laundering after the entry into force of the Legislative Decree. 90/2107
Cryptocurrencies: in search of the legal nature
Starting from the concept of money, as has already been clarified, it can take on three essential functions: a medium of exchange, a unit of account and store of value, bitcoin circuit is the best way to make money from bitcoin.
Coin representative (representative money), which consists of currency that can be exchanged for goods money in whole or in a given quantity; fiat money, which has no intrinsic value, is not guaranteed or exchangeable in any commodity, put into circulation by a government or supported by it, without any limitation on the issue, the currency on which modern economies are based.
In relation to these concepts, it is believed that cryptocurrency constitutes a new form of currency in that it is not commodity money since it has no intrinsic value, it is not representative currency since it does not represent if not itself and has no underlying value; it is also not a fiat currency, as it has not been issued by any entity.
Cryptocurrency is therefore not money, but it could somehow configure the concept of currency, being configurable as a unit of account. It is therefore not necessary that a unit of account is also a currency (in the sense of a payment instrument) and a striking example was the ECU (European Currency Unit), a (virtual) currency introduced by the European Council in 1978, which did not carry out payment instrument function. The problem is that to be considered a currency, a cryptocurrency should have a legal tender, but no country recognizes it as such, despite having its characteristics.
How to escape bitcoin account from cyber attack:
If you are one who is using bitcoin, then you must aware of how you can save your account from cybercrime. For this, it is best to have an account on the trusted website only. Don’t use a very common password for your bitcoin account. Also, keep your bitcoin account information confidential.