US Agency Raises Questions about Cryptocurrency’s Decentralized System

A report by a U.S. government research agency raises questions about the decentralized system of cryptocurrency technology.

The report comes as major cryptocurrencies suffer large drops in value and several companies supporting the technology experience business difficulties.

A cryptocurrency is a digital form of money that is not overseen by governments or banks. A network of computers records cryptocurrency activity between users. This activity is included in a “ledger,” or list, known as the blockchain.

Because the blockchain involves a network of computers across the world, the system is considered decentralized. The blockchain was designed this way with the goal of preventing a single person or group from controlling the system.

The new report on blockchain technology was recently published by the U.S. Defense Advanced Research Projects Agency, or DARPA. The agency seeks to carry out research and development activities for the Department of Defense.

The DARPA report was called “Are Blockchains Decentralized?” It was completed over the past year in cooperation with the U.S.-based computer security and research company Trail of Bits.

The study centered on blockchains for the two most popular cryptocurrencies, bitcoin and ethereum. The researchers looked at the current level of decentralization with those systems and examined possible security risks.

The report suggests these blockchain systems can be subject to “unintended centralities” that could result in security issues for cryptocurrency investors.

Trail of Bits said in a statement the research found that some people involved in the blockchain process can gain “undue, centralized control over the entire system.” Such control can happen when individuals “subvert the properties” of current rules related to the blockchain’s networking process.

More security risks

In addition, the company said that while the encryption system used in cryptocurrency activities is generally considered secure, “it does not guarantee security.” The term encrypt means to change information from one form to another in an effort to improve security and prevent attacks.

Specifically, Trail of Bits said blockchain traffic…