Bitcoin and other cryptocurrencies are regularly performing the news for their animated prices. But did you know that Bitcoin is actually safer than some commercial systems? Keep studying to see why Bitcoin is frequently safe, how it operates, and how to manage your digital assets securely.
What is Bitcoin?
Bitcoin is a digital currency built-in 2009. A decentralized cryptocurrency, Bitcoin relies on a peer-to-peer network called the blockchain to list transactions, rather than any official authority. There are no physical bitcoins, and their value can change widely depending on the market.
Bitcoin has motivated a group of other cryptocurrencies, contain Ethereum, Cardano, Dogecoin, and thousands of others. Anyone with the mechanic know-how can generate their own cryptocurrency. While that might not sound very safe, cryptocurrency and blockchain technology are surprisingly robust.
Why is Bitcoin safe?
Bitcoin technology is mostly secure because it’s built on secure technology: the blockchain. Bitcoin is also cryptographic, public, decentralized, and permissionless. As an investment though, Bitcoin may not be secure due to market volatility. Here are some reasons why Bitcoin tech is secure:
Reason #1: Bitcoin uses secure cryptography
How is Bitcoin safe? Bitcoin is backed by a special system called the blockchain. Compared to other financial problems, the blockchain is a problem technology that relies on safe core concepts and cryptography.
Blockchain uses volunteers — lots of them — to sign hashes that validate transportations on the Bitcoin network using cryptography. This machine makes it so transactions are basically irreversible, and the data safe of Bitcoin is more powerful.
Reason #2: Bitcoin is public
While being public may not sound secure, Bitcoin’s ledger clarity means that all the transactions are open to the public even if the people involved are anonymous. That makes it very important to cheat or scam the system.
With all the data publically open, there’s nothing for serious actors to “hack in” and see — all transactions are public to everyone.
Contrast that to the general data breaches of established companies, and Bitcoin starts to sound a lot more reliable. When you buy or sell bitcoin, you don’t attach any personal data to the blockchain like your passwords, credit card numbers, or your physical address, so there’s nothing to leak.
That’s very different from when hackers break into regular financial systems — just ask the folks over at Equifax.
Reason #3: Bitcoin is decentralized
Bitcoin’s distanced network has over ten thousand nodes all over the world that store track of all events happening on the system. This large number of nodes guarantees that if something happens to one of the servers or nodes, others can pick up the slack.
It also means that trying to hack into one of the servers is pointless. There’s nothing there you could steal that the other nodes and servers couldn’t check unless you happen to control 51% of the nodes — not impossible, but extremely unlikely.
Reason #4: Bitcoin doesn’t require permissions
Being free and decentralized involves very little if you have to be left in by some authorization. With no governing body, Bitcoin is open to everyone. Its lack of permissions stores Bitcoin open and fair for everyone.
What is the blockchain, exactly?
Blockchain is a shared ledger that uses hash functions to provide a unique fingerprint of every transaction, recording and verifying them. When each step is signed and verified as unusual, it’s given to enter a “block” of other changes and becomes difficult to modify. These blocks together form the blockchain.
How secure is the blockchain?
It’s guarded by the 256-bit SHA hash functions, the same level of protection that banks, the military, and virtual private networks use to encrypt their operations. But unlike encryption, which can be decrypted, SHA hash functions provide a unique fingerprint for each event that cannot be replaced. In other words, cryptography in blockchains is related to signing the data with a single, unbreakable identifier that other network participants can verify using the same cryptographic algorithm.
The blockchain also increases security by consensus. For it to be chopped, someone would want to take over 51% of Bitcoin drilling abilities, which would be incredibly unlikely. However, your cryptocurrency wallet isn’t necessarily secure — and that’s where you’d kept your bitcoin.
Does Bitcoin use encryption?
No, Bitcoin does not use encryption. It’s called “cryptocurrency” because its digital signature algorithm uses the corresponding mathematical methods used for a variety of encryption based on elliptic curves. Bitcoin does the Elliptic Curve Digital Signature Algorithm with the elliptic curve secp256k1, not encryption.
Bitcoin security issues
While Bitcoin technology is rather reliable, there are some risks to think about before you make a purchase. Bitcoin isn’t anonymous, the about of cryptocurrencies can be very volatile, Bitcoin relies on passwords, and cryptocurrency wallets are not safe from theft.
Bitcoin isn’t anonymous
While Bitcoin does change your personal data, it doesn’t disguise the address of your crypto wallet. That means you’re not “anonymous” but “pseudonymous” — and someone could use evidence to track down your personal data. Governments can subpoena reports, and cybercriminals use all sorts of illegitimate ways to obtain details. Because all the records are known, if someone knew how much you used, when, and where you spent it, they could expose your transaction on the ledger and follow it back to your wallet. Once they’ve done that, they could map your spending habits, collect data on your life, and maybe even force you. But with the current price of web tracking these days, it’s considerably more likely that sponsors or data brokers are spying on your private business through your internet browsing.
Bitcoin is volatile
Although Bitcoin uses strong cryptography, you could claim it’s not a secure investment because of its volatility. With no governing body and an international, 24/7 market, a bitcoin worth $60,000 one day can be worth $30,000 just a few days later. Though there have been some years of security, these nevermore last long. After all, there’s a reason why people play that Bitcoin is just astrology for men. Invest at your personal risk, knowing that you may incur serious losses.
Bitcoin passwords can be lost
Bitcoins are saved in crypto wallets. If you forget your Bitcoin password — that is, the password to your wallet — you’ll be in difficulty. There’s no middle authority you can talk to, to recover your account. Many people have lost millions of dollars after losing to remember the password to their crypto wallet. That’s just one more idea you should always use a password manager. But even your own anticipations might not be enough. One popular crypto exchange failed to repay $190 million to clients after its founder died without disclosing the only password.
Bitcoin can be stolen
Bitcoin’s blockchain can’t be chopped, because all information is already publicly available, but can bitcoin be hacked? Sort of — just because bitcoins are broadly safe on a system level doesn’t mean hackers can’t use other methods to keep them. Here are some of the problems to your cryptocurrency:
- Phishing attacks: This classic social engineering method can fool you into sharing all kinds of personal information, from your banking details to your crypto wallet features. Always be wary of spoofed emails or messages that request your individual data.
- Fake websites: A sneaky fake website could fool you into giving your own info over to hackers.
- Man-in-the-middle attacks: Although unlikely, a hacker could start a man-in-the-middle attack on your node or crypto wallet.
- Malware: A lot of malware efforts revolve around bitcoins and Bitcoin wallets. Watch out for malicious code that can enter your crypto wallet or crypto-mining malware that makes your computer mine crypto for a hacker.
It’s even feasible for some wily hackers to steal wallet keys from cold storage, although the technique is still fairly experimental.
With the complexity and novelty of Bitcoin and other cryptocurrencies, it can be difficult to know if you’re waiting safely. A robust antivirus like AVG AntiVirus FREE will guard against phishing attacks, fake websites, and all kinds of malware. Get 24/7 protection so you can trade, mine, and browse securely.
Should I try Bitcoin?
As with any investment, you’ll have to make your personal choices. Is Bitcoin really safe? As explained above, there are lots of ideas Bitcoin is safe. But there are lots of ideas to be skeptical of as well — and only you can determine what you think is a safe investment. If you do decide to invest, be ready for all types of highs and lows.
If you have any doubt about Bitcoin. Don’t hesitate to contact us through the given email. Airzero sec will be your digital partner.
Author - Johnson Augustine
Ethical Hacker and Data Security Researcher
Founder: Airo Global Software Inc
LinkedIn Profile: www.linkedin.com/in/johnsontaugustine/