Since cryptocurrency is the next revolutionary thing in our society, you probably had thoughts of investing in Bitcoin, the most sought-after cryptocurrency there is. Bitcoin success made a hundred cryptocurrencies possible and so many startups on blockchain technology. But is it safe? And can Bitcoin be hacked? Let us find out.
Beginning of Bitcoin
Bitcoin was launched 10 years ago, in 2009 by an unknown group of people using the name Satoshi Nakamoto. Because it was launched as a decentralized digital currency, no bank nor government could oversee or regulate this cryptocurrency. Peer-to-peer transactions have further elevated the cryptocurrency world and Bitcoin has been a major contributor. Only Blockchain technology is used to verify transactions made with digital currencies.
Since it has been released the main issue that has always been present with Bitcoin was its security. Bitcoin itself is almost impossible to get hacked, all because of Blockchain technology that was mentioned earlier.
Blockchain is an incorruptible ledger of economic transactions. It is a simple, yet ingenious way of passing information from point A to point B in a fully automated and protected way.
One party starts a transaction by creating a block and then digitally signing it with its private key created via cryptography. This block then gets verified by millions of computers distributed around the net.
That same verified block then becomes added to the chain which is stored across the internet creating a unique record and unique history. Trying to hack a single record would mean hacking the whole chain with millions of instances which is virtually impossible.
This attack refers to an attack on the bitcoin blockchain. This type of attack is hypothetical, virtually impossible, and still would do no serious harm to Bitcoin itself. It would be done by a group of miners controlling more than 50% of the network’s mining hash rate and computing power. Attackers could then control the new transactions and prevent them from gaining confirmation and allowing themselves to stop the payments between users.
Bitcoin Wallets and Transaction
Bitcoins are held in wallets and traded through cryptocurrency exchanges like Coinbase, Bittrex, Binance, Upbit, Huobi, Bithumb.
There are many security risks in both of these components. Developers are always trying to update their wallets so security levels can be higher. But as always, there are people who want to access the wallets of others illegally.
In the transaction process, a security measure that is most commonly used is a two-factor identification, so anyone that has access to your email or phone number can authorize transactions. Since emails and phone numbers are still possible for a hacker to get to, he or she may be able to control your transactions regardless.
Bitcoin exchanges are getting hacked, not the Blockchain
Facts would say that Bitcoin is pretty safe from hackers, but the same cannot be said for the companies that are built around Bitcoin. It is not unusual to read or hear that Bitcoin exchanges have been hacked, and their customer’s bitcoins have been lost.
The thing with Bitcoin is that once it is gone, it is gone for good. You no longer have the key, someone else does. There is a whole list of hacked Bitcoin exchanges and in 2014. hackers collapsed the Mt. Gox exchange after losing $460 million. According to Wall Street Journal, there has been $1.7 billion in cryptocurrency stolen over the years.
Some say that hacking into an exchange is like robbing a bank, except you are doing it a thousand miles away from your home, and the money you get is untraceable and can be laundered through many wallets in a matter of minutes.
When hacks occur, law enforcement agencies get involved in attempting to catch hackers and bring them to justice. Penalties are being applied as they would in any type of theft. In the United States, law enforcement agencies such as the FBI have taken action against these types of thefts and illegal uses of cryptocurrency.
It should always be taken into consideration that putting your assets on an online platform can have so many advantages in terms of flexibility, but there are also huge security risks that can occur if the security of the platform is not 100% sure.