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judymcconville@roadrunner.com 2017-05-02 12:31:36 -07:00
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@ -7,7 +7,7 @@ However, bitcoin has capabilities that cash, gold, and bank accounts do not. A b
=== Security Principles
((("security", "security principles", id="Sprinc11")))The core principle in bitcoin is decentralization and it has important implications for security. A centralized model, such as a traditional bank or payment network, depends on access control and vetting to keep bad actors out of the system. By comparison, a decentralized system like bitcoin pushes the responsibility and control to the users. Because security of the network is based on Proof-of-Work, not access control, the network can be open and no encryption is required for bitcoin traffic.
((("security", "security principles", id="Sprinc11")))((("decentralized systems", "security of")))The core principle in bitcoin is decentralization and it has important implications for security. A centralized model, such as a traditional bank or payment network, depends on access control and vetting to keep bad actors out of the system. By comparison, a decentralized system like bitcoin pushes the responsibility and control to the users. Because security of the network is based on Proof-of-Work, not access control, the network can be open and no encryption is required for bitcoin traffic.
On a traditional payment network, such as a credit card system, the payment is open-ended because it contains the user's private identifier (the credit card number). After the initial charge, anyone with access to the identifier can "pull" funds and charge the owner again and again. Thus, the payment network has to be secured end-to-end with encryption and must ensure that no eavesdroppers or intermediaries can compromise the payment traffic, in transit or when it is stored (at rest). If a bad actor gains access to the system, he can compromise current transactions _and_ payment tokens that can be used to create new transactions. Worse, when customer data is compromised, the customers are exposed to identity theft and must take action to prevent fraudulent use of the compromised accounts.