Bitcoin Evolution enterprise wants to make Bitcoins safe

Cologne Start-up enterprise wants to make Bitcoins safe: In the betting industry they already proved, how it goes and billion-euro conversions secured – with cryptography ?larva in Germany?

Virtual money (wallets) and exchange exchanges for Bitcoins are always the target of hackers. The day before yesterday, the Bitfinex exchange platform was hacked and 120,000 Bitcoins worth 58 million euros were stolen. On the stock exchange, Bitcoin Evolution the Bitcoin price fell from around 590 euros a week ago to 482 euros. CryptoTec AG wants to put an end to such thefts. The Cologne-based company is relying on the cryptographic technology it has already developed, which has proven itself in the betting industry for years without any notable incidents and has successfully secured transactions worth billions.

Bitcoin Evolution make Bitcoins safe

In June 2016, Ethercoins worth 50 million dollars were stolen from DAO (Dezentrale Autonome Organisation). Previously, the Japanese Bitcoin exchange Mt Gox had to file for bankruptcy after a Bitcoin theft worth several million euros. “We offer simple modules against such attacks, in particular to protect the new business models on the Internet against attacks from inside and outside,” says Michael Mertens, CEO at CryptoTec. “Because we have for a legitimate Bitcoin Evolution Review a secure and user-friendly solution for file-based online cooperation, file transfer and real-time communication with end-to-end encryption for companies and projects of all sizes: the “CryptoTec Zone”. It not only enables tap-proof and tamper-proof correspondence – worldwide and in real time – but also the transmission of unlimited data and virtual workrooms including file synchronization,” he adds.

According to CryptoTec, important encryption technologies are too often not taken into account in Internet transactions and new payment methods, and in some cases the legal framework in the countries in which the online trading platforms are operated is also lacking. The encryption technology used by CryptoTec in combination with digital signatures protects against unwanted eavesdropping, intrusion and falsification of data Bitcoin Evolution and confirms the authenticity of all system participants.

CryptoTec AG uses the globally recognized cryptographic methods RSA-4096, AES-256 and SHA-256 for encryption. The core is “CryptoLib”, a specially developed cryptographic high-level library. The Distributed Systems Platform (DSP) contained in it does not only contain a public key infrastructure (PKI), which ensures the fully automatic distribution of cryptographic keys. It also automates DNS integration, data distribution, and a variety of convenience features, such as notification of contacts about name changes or new addresses. All system participants receive an address marked with a double @, for example “bob@@cryptotec.com”. Manipulated content and sender data are automatically detected, ensuring that only a closed circle of participants consisting of authenticated persons is used for communication.

In 2015, the “CryptoTec Zone” in Berlin won second place at the Outstanding Security Performance Awards (OSPA) in the category “Outstanding security technology installer”. The OSP Awards are presented by the German Alliance for Security in Business (Bundesverband der Allianz für Sicherheit in der Wirtschaft). The jury consists of proven experts such as Steffen Gentsch, Head of Security (CSO) of the Airbus Defence and Space Division, and Michael Hange, President of the Federal Office for Information Security. In his laudation at the award ceremony on November 11, 2015, the latter emphasized “the user-friendliness and low costs” of the CryptoTec solution, which is “predestined for use as state-of-the-art encryption”.

All modules will be developed within Germany. CryptoTec AG is therefore not subject to any interference by government bodies.

The Price of Decentrality – Blockchain and Scalability

One of the outstanding features of Bitcoin and other crypto currencies is to be a decentralized electronic money system. A payment option that gets by without middlemen, banks and other institutions. But decentralization has its price: scalability.

We express many areas of our everyday world in numbers. The optimal temperature for T-shirt weather, the acceptable price for breakfast rolls and the kilowatt hours of electricity consumption. In order to be able to estimate and classify the whole thing better, we use scales. How do you feel on a scale from 1 to 10? The evaluation seems to be easier with numbers, one can imagine (at least partly) better what is meant.

Mempool – storage space for transactions
A scale is the division of orders of magnitude, usually into numbers. The ability to adjust this order of magnitude is called scalability. This is where Bitcoin and other blockchain-based crypto currencies come into play. The blockchain rows block by block and fills them with information. The Bitcoin blockchain is designed to store all essential information so that no middlemen are needed anymore. (For a better understanding, please refer to our “What about Ledgers” series and the Beginner section).

However, as usage increases, the problems increase. In the case of Bitcoin, the size of the blocks is fixed so that only a limited number of transactions can be integrated into a block. If significantly more transactions are to become part of the block chain, a congestion arises – the mempool. As a result, high transaction costs can be demanded for preferential treatment. Bitcoin therefore has its problems especially in the area of microtransactions.

Expensive coffee
Too technical? Here you can consult the often quoted coffee example. If I want to settle my coffee with a Bitcoin transaction, the transaction must be stored in a block. However, in times of high Bitcoin usage, there are many transactions that need to be stored in a block – and the payment for that coffee is one of them.

Buyers and sellers are now faced with a choice between three evils: letting the customer wait until the transaction is stored in the blockchain would be the first. But that’s out of the question when it comes to coffee to go. To demand a high transaction fee from the customer so that the payment process is stored in the next block in the block chain is also out of the question: The transaction costs would be higher than the coffee itself. Therefore, sellers often resort to the rather unsightly solution of accepting a transaction without confirmation in the hope that it will soon be stored in the blockchain. In principle this has proved to be successful, but firstly the fraudster could exploit it, secondly the mempool is emptied after two weeks. If the own transaction had still not been confirmed after two weeks, the coffee seller would have been cheated of money.

The Bitcoin blockchain therefore has problems adjusting the size – the problem of scaling. The Bitcoin blockchain is by no means the only crypto currency that has to struggle with this and other problems. For example, Ethereum currently has a four-fold increase in the number of unconfirmed transactions. Other networks, which may have fewer unconfirmed transactions, have fewer total transactions to handle than Bitcoin.

Ways to solve the scalability problem
The problem of scalability is therefore the block size – the number of transactions is limited. One way to solve this problem, at least in the short term, is block enlargement. In the past, there have been several attempts by parts of the community to do just that. But since there was no agreement in the community, there was a spin-off, a fork – now called Bitcoin Cash.

Another solution is the implementation of Segregated Witness. This Bitcoin update addresses the scaling problem from several angles. On the one hand, more transactions can be integrated into a block without changing the block size. Segregated Witness also enables the Lightning Network. The transactions no longer take place on the blockchain itself, but are executed via separate micropayment channels.