“If you own the keys to your cryptocurrency account, your money is secure. If someone else holds the keys to your account, they own your money, too.”
This popular saying by bitcoin experts warned early blockchain adopters against the risks of sharing passwords, keys and passphrases in mobile apps or cloud-based storage. Most advise in favor of keeping the keys on a separate piece of hardware, a token or a smart card.
Smart cards come with excellent computing powers; they are among the best of media that solve several blockchain problems, starting from security to scalability and ease of use. Blockchain app developers are looking to integrate them into decentralized apps; this is currently an exciting area for testing their possibilities.
Safe and Customizable Data Storage Capacities
If we say that blockchains are distributed ledgers for financial transactions (and other exchanges of value), used and verified without the mediation of a central authority, then an example metaphor for describing smart card implementation in blockchain apps is performing a Visa transaction without the Visa company and the banks associated with the transaction.
Why are smart cards a convenient method for blockchain integration?
Smart cards is like microcomputers set on a card. They can store large amounts of data and incorporate several data writing and reading technologies. However, instead of the bulk of hard drives, it can be stored in a pocket and carried around while traveling. It’s affordable and convenient for diverse use. A consumer can own more than one at a low cost. But, smart card versatility goes beyond solving financial transaction issues, such as low speed, high fees and limited privacy. A perfect example of smart cards’ convenience used by blockchain app developers is the use for physical storage of private keys which are part of the cryptocurrency transactions.
Smart Cards Support Several Blockchain Security Issues
Blockchain apps face some common app security issues, as well as some unique to the technology. For example, blockchain apps need a mechanism for managing the user private and public keys in a safe and cheap way. Private keys are a guarantee for the user security; they should be known only by the user. Just as with any pair of cryptographic keys used for digital communications, private keys can be stored on smart cards separate from the public keys. In this way, smart cards surpass other digital data devices. They can generate and store user keys (more than one), and keep them safe with low power use. Smart card integration possibilities are amazing: one can easily imagine implementing the technology in wearables, USBs, tokens, as well as anywhere else that allows them to be used as portable certifiers of blockchain transactions.
Identification in a blockchain app was a viable technology innovation for the first world e-residency. Estonian blockchain app developers found a solution for applying public-key cryptography and blockchain to set e-residency cards. An array of government services became available to anyone owning the residency ID card. Despite the security concerns for possible use of multiple cards, more than 3,000 government services are now available transnationally to card owners.
Smart cards integrated into blockchain apps in this way solve existing problems related to processing times and fees. Citizens, businesses and government officials use the cards not only to vote, do online banking, file taxes and submit annual business reports, but to support a stronger security with a decentralized network of users.
Safeguarding information by distributing the central authority via multiple attack points is not a unique attribute of smart cards; it’s inherent to the blockchain technology. If a whole country could find functional solutions with government ID cards, it’s easy to think of how blockchain app developers can apply smart card technology for business purposes.
Smart cards contain microchips. They can support any blockchain app that needs simple ways for key generation. It’s much easier to spread malware attacks or compromise data storage that is not classified as cold; private keys held on a hard wallet assure improved key protection.
Popular cryptocurrency wallets use smart cards. The high customization possibilities of smart cards enable using several of them for securing one public address. A smart card can support other authentication methods, such as biometrics.
In a way, a smart card is a miniature private safe for financial transactions performed via blockchain apps. The fact that a smart card can be disconnected from the network at user will assure user autonomy. Digital signatures can be stored within, and later used to support transnational funds or asset transfers.
Finance is just one area where they are a viable media for blockchain apps. The NFC technology in smart cards enables easier data reading at the device front end.
Can contactless smart cards become blockchain app developers’ favorite? Sensors and IoT work well, so, the hypothetical answer is – yes.
In the IoT, app developers can integrate smart cards to record transactions with autonomous IT sensors. The poor IoT infrastructure is currently a big issue for implementing blockchain within the smart network. By removing humans from simple and low-risk transactions, sensors placed at relevant IoT nodes can instigate a command with smart card technology.
There are numerous cryptocurrency debit cards that work with success on the exchange trading. Despite the vulnerabilities of the smart card technology, the cards are excellent means of support for smart contracts and new wave e-commerce – the future of doing quick, borderless and decentralized global trade.