Algorithm and Digital Payments
To analyze the security levels in electronic payment systems, algorithms are used to ensure that the transaction for the user trustworthy.
A cipher, or cryptographic algorithm, is the means of altering data from a readable form (also known as plaintext) to a protected form (also known as ciphertext), and back to the readable form. Changing plaintext to ciphertext is known as encryption, whereas changing ciphertext to plaintext is known as decryption.
When we talk about Algorithmisation, we talk about the process of using digitized labelled data which is stored as a data set in a database, and using automated processes to create analytics from which users can derive information.
By using Machine Learning and Artificial Intelligence, data scientists could create an algorithm that is able to use the many variables that are part of a transaction and predict the likelihood of a newly submitted transaction to be fraudulent.
Crypto forensic firms such as ‘Chainalysis’ utilize proprietary algorithms to monitor and flag suspicious or fraudulent transactions on exchanges.
The Bitcoin Network uses SHA (Secure Hash Algorithm), such as SHA-256.