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Why Using Bitcoin Could Make a Target-Style Data Breach Obsolete

The recent data breach at Target is one of the worst breaches of credit card information ever. But if those millions of Target Corp. (NYSE: TGT) customers had been using Bitcoin instead of credit cards, the thieves could not have stolen any of their personal data.

The thieves who stole the credit card data from Target customers took the information from Target's own computer systems. They got credit card numbers, names, and home addresses. In short order, the Target thieves were selling this data to other criminals over the Internet.

This is more evidence of the rising vulnerability of credit cards to clever and determined thieves.

But using Bitcoin is much more secure than paying with your Visa or Mastercard.

In fact, Bitcoin's security is one of the chief advantages of using Bitcoin over other payment methods, and a big reason why we'll see more merchants move to accept the digital currency – making Bitcoin more valuable.

"A Bitcoin-based alternative to conventional credit card networks could be significantly more secure and, as a result, more convenient and affordable for everyone," Washington Post technology writer Timothy B. Lee said recently.

How Using Bitcoin Is Safer Than Using a Credit Card

Bitcoin is actually much more like cash than most other forms of payment.

Each transaction only contains an address (a unique string of characters) for the sender, an address for the recipient, and the amount of Bitcoin being transferred between them.

The address can only successfully send Bitcoin if it has access to the private key associated with a person's Bitcoin wallet. This private key is never sent as part of the transaction, however.

But just as importantly, using Bitcoin instead of a credit card also means that no personal data is transmitted or stored. That leaves potential data thieves empty-handed save for the Bitcoin addresses, which are useless without the private keys.

Another aspect of Bitcoin that is appealing to web shoppers:

Join the conversation. Click here to jump to comments…

  1. John W. Ratcliff | January 17, 2014

    Great little article but I would like to add one minor point. There is nothing magic about what bitcoin does in terms of public/private key encryption. That is bread and butter basic technology used everywhere. Bitcoin is special, but not because it uses this type of standard encryption. What makes it special is that there is no central authority.

    For credit cards, they could have adopted public/private key encryption at any time in the past ten years protecting the general public from all of these security breaches. Most all credit cards used in Europe have already had this technology for years. I have no clue why the American credit card companies have not fixed this. It's very upsetting because the current system is a complete disaster.

    My point here, is that they have the technology to fix this, have had it for years, have already deployed it in Europe, and they don't need bitcoin to implement secure payments.

    They gotta fix this, like now!

    Thanks,

    John

  2. gamblingwithbitcoins | January 17, 2014

    Excellent article, maybe I am wrong but I am pretty sure that banks will try to sell bitcoin credit cards

  3. Jeff P. in Canada | January 20, 2014

    So who exactly is receiving the 1% surcharge for bitcoin use? And where exactly are the records for anyone's bitcoin wallet balance being kept? And what guarantee do bitcoin users have that when that central record is hacked, they will be guaranteed their balance doesn't just disappear?
    I have a friend who is a lead programmer for government, who says that banks are continually getting hacked but that they simply write off the loss and still guarantee their customers' balances. There is no guarantee like that for bitcoin.
    Why do you guys keep pushing this bitcoin scam. When you cannot put a finger on the principals behind the scam, to hold them responsible for when things go wrong with it, it is definitely a scam.

    • Thomas | January 21, 2014

      That 1% charge you speak of goes to the miners, who contribute their machine's processing power to the system, essentially giving them a paycheck. The records for all transactions are kept by almost every user on the network simultaneously, and is processed by the miners, as mentioned. It is not possible to hack the central record as it is decentralized, it would be equivalent to trying to hack the entire internet all at once, and even then there are plenty of alternatives, so it is actually harder than hack than the entire internet. The guarantee is simply in mathematics, several key mathematical principles go into bitcoins protection, but in the end what keeps your bitcoins secure is how YOU store them. This last thing you said is absolutely unnecessary, if your trying to disprove a system then you don't need to call it a scam, and not understanding how something works does not make it such. If you knew anything at all about the systems behind bitcoin then you wouldn't be typing it calling it a scam and making plainly false assertions.

      • Roy | January 22, 2014

        And when all coins are completely mined one day, who will be the 'miners' who sit idle just to collect that 1% charge? Maybe it will become 2%, 3%, 10% or 50% just to get enough machines plugged in not to 'mine' but to process the transactions?

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