How will cryptocurrency projects tackle security and transparency problems?
Blockchain and cryptocurrency are here to stay, but with the market so volatile, will different crypto projects be able to tackle its security and transparency problems? This is a burning question that investors and crypto experts are trying to find an answer to, now that they have experienced both the ups and downs of the market in the last few years.
With the security concerns affecting centralised exchanges, it is making regulators and investors uneasy about where to invest and how much to invest. Fortunately, one easy way to predict the market is using trading tools powered by sophisticated algorithms. Investors can rely on tools like The Crypto Genius Review to get an idea of where the market will go in the next few days.
But, one advantage of these problems is that the experts know how to tackle them. Many crypto projects are now aimed at addressing the transparency and security slip up so that investors feel free to put their money in without second thoughts.
Bitfinex and QuadrigaCX recently pointed out the widespread transparency issues in the crypto industry. There are two areas that crypto projects are trying to tighten up that will solve the transparency problems: proof of genuine trading volumes and proof of solvency. The latter is essential to scale the success and failure of respective cryptocurrencies. Bitcoin, for example, offers complete proof of solvency, and that’s one of the reasons why it is still ahead in the race even though its price is slightly on the lower side.
Proof of solvency is crucial if cryptocurrencies want to build trust among investors because they will want to be aware of the risks involved with a specific financial entity where they are investing their funds. But most exchanges don’t prefer to disclose the financial details of internal operations publicly, and that’s why there are trust issues.
One of the projects taken up by Blockstream, one of the leading Bitcoin development companies announced their standardised tool to ensure exchange solvency. This is the approach that new crypto projects are coming up with to fight transparency problems efficiently.
Removing centralised custody
In addition to countering transparency issues, cryptocurrency projects are also striving to fight centralised exchanges. Although it will take time, the projects are aiming to remove the concept of custody from these exchanges completely. Exchange custody is a straightforward security threat that is hampering the trust of both new and veteran investors.
But, with a new wave of P2P exchanges and trust-minimising technology, the projects are trying to circumvent the function of centralised custody of different assets. Projects like Atomic Wallet are using a technology known as Atomic Swaps that allows the users to exchange funds without the involvement of third-party custodians. Since the wallet supports cross-chain and uses P2P technology, you can swap Ethereum to Bitcoin or vice versa without any threat to user security.
Although the history of crypto exchanges is peppered with controversy, the ongoing and upcoming projects are trying to set the records straight so that new investors feel free to invest after taking a look at the improved transparency of the exchanges.
The editorial unit