No wonder Blockchain is one of the fastest-growing technologies in the whole wide world. Also, one cannot get away from the fact that a part of its popularity is derived from cryptocurrencies. It is now more than a decade that cryptocurrencies have come into existence, like Bitcoin – the first cryptocurrency was launched in the year 2009. Ever since hundreds and thousands of cryptocurrencies came into existence and there was no looking back for them. In today’s world, it turns out that the word “cryptocurrency” is somewhat outdated. What is quite common to hear is the ICO – Initial Coin Offering – an unregulated means by which funds are raised for new cryptocurrency ventures. These ICO-generated coins are commonly referred to as “tokens”. On that note, what cannot go without mention is the rise of a special kind of token, called the security token. It is a portable device that authenticates a person’s identity electronically by storing certain personal information.
Security tokens are digital, liquid contracts for fractions of any asset that already has value. The asset could be anything, for example – real estate, a car, corporate stock, etc. There are a wide range of forms that a security token can take right from hardware tokens that contain chips, USB tokens that plug into USB ports, wireless Bluetooth tokens to programmable electronic key fobs. While using security tokens, the investors can expect that their ownership stake is preserved on the blockchain ledger. On a promising note, security tokens stand the potential to roil the traditional financial markets in favour of the newer, more hybrid blockchain models.
Wondering how do security tokens work? Well, a security token provides authentication for accessing a system. This is done through any device that generates a password. The device used generates a new password every time it is used. So, if the user is willing to log in to a computer or virtual private network, a security token can be used by typing the password generated by it. The technology is such that the device generates a random number, encrypts it and sends it to a server with user authentication information. What follows is sending the encrypted response back that can only be decrypted by the device. Hacking is not something to be bothered about for the fact that the device is reused for every authentication which means that the server does not have to store any username or password information.
No wonder, user ID’s and passwords are the most widely used form of authentication. However, one cannot deny that security tokens are a more secure option for protecting networks and digital systems. What stands as a weak leg when it comes to user ID’s and passwords is that they aren’t always secure. With a range of methods that hackers can use to crack the passwords, the fact that passwords become vulnerable cannot be overlooked.
The last couple of years have been no less than a roller coaster ride for cryptocurrencies. However, what remains consistent is that despite all this, there are projects that provide real value to the investors. Digital assets have always been meaningful applications for investors. Now, what we need to look forward to – Is 2021 the year of security tokens? Considering the advantages and security that a security token brings forth, it is highly likely that its implementation would see a spike in the coming years. Let’s watch out!
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