Bitcoin is becoming ever more popular as society progresses with technology. As more people get involved, an increasing part of the population becomes interested in trading and investing in this dynamic and fast-growing currency. However, the commonly occurring thought – “is bitcoin secure” – keeps many from beginning their Bitcoin journey.
As with everything, there are always risks. Many cite high volatility, a fluctuating market, a lack of regulations worldwide, and hacking as their highest-ranking concerns. All of these play into the security of the currency. However, it’s not as simple as a yes or no answer. The answer to the question “is bitcoin secure” is a layered one.
Hackers are a particularly large concern since the currency is completely digital. This is true, especially for those who do not have the basics down or lack understanding.
Taking into account the technology this digital token is built on, the protocols involved in the creation, sharing, and transactions of the currency, and an overall understanding of Bitcoin, we can come to an acceptable conclusion.
Is Bitcoin Secure? Yes, For The Most Part
There are a few technicalities that come with the use of the currency, which ensure its safety and security. Most of these attributes made the currency so popular in the first place. These characteristics include encryption, transparency, and decentralisation.
The main component to all factors that ensure the answer is “yes” to the question “is bitcoin secure” is the technology it is built on. Blockchain is the backbone of its network and ensures the system is secure for trading and investing in the currency.
To summarise the technology’s explanation concisely, blockchain is a public, universal ledger on which all bitcoin transactions, totals, and trades are stored. Each transaction is stored on a block after being verified by nodes or miners. The block is encrypted with a hash code, making it nearly impossible to alter the information inside.
Because of the system of nodes and miners, it is also impossible to copy and paste bitcoin, as they will know that the coin was not acquired through mining or trading. A copied coin will simply not show up on the ledger.
Now that you understand how blockchain secures the BTC let’s dig a bit deeper.
Encryption
To answer the question “is bitcoin secure” we must understand the encryption aspect. The popular cryptos encryption is much more complex than the average encryption, which means it is much more difficult to hack into.
For a transaction to be added to a block, miners must find a suitable hash to include, which requires them to solve a computational puzzle using an algorithm. Every input will lead to a unique output or hash. The hash is encrypted into the block to identify it from other blocks, as each has a unique hash.
In addition, the hash of block A is used (in addition to bitcoin transactions) as input to generate a hash for block B. If you change the information in block A, you’ll have to change the hash for all the following blocks as they are all connected, which is nearly impossible.
This makes hacking so difficult on the blockchain system and is why we can be almost certain that it is secure.
Transparency
The Bitcoin blockchain is a public ledger. On the surface, this may sound as though your BTC is less secure. However, that is not the case. The public ledger ensures transparency in transactions and currency trades while the participants’ identities are kept anonymous.
A transparent system means that everyone can see transactions, making it difficult for anyone to commit fraud, steal, or cheat the system. So, is bitcoin secure in terms of fraud or any similar crimes? Yes, it is.
Decentralised
Since the currency is held on a blockchain supported by hundreds of thousands of nodes worldwide, the information is unlikely to get lost. Each node has an identical copy of the public ledger. This is important because hacking into only one node makes no difference since all the other nodes will still have the correct information.
After noticing changes in the information on only one node, the edits will be disregarded as they do not match up to the rest of the network’s information. Hacking into all nodes at once is impossible, and hacking into them all fast enough to do it before anyone notices is probably impossible too.
The inner workings and systems of the currency should provide firm reassurance to the nagging question: is bitcoin secure? However, it would be irresponsible of us to paint such a pretty picture without warning you of the possible risks to security too.
Potential Risks
As has been stated before, bitcoin is secure for the most part. The technology it is built on ensures this. While the currency has been touted as an impenetrable, unstoppable force to be reckoned with, there are some risks.
In terms of investing and trading, users most commonly worry about hacking and stealing. Other risks include regulatory risks, the anonymity factor, and volatility.
Hacking
One of the most commonly theorised risks is the 51% attack. If a group of miners took control of more than 50% of the computing power on the bitcoin network, they would be able to control which transactions are put through and could reverse transactions to double-spend the coins.
Most experts believe this scenario is unlikely because the cost to pull it off would outweigh the potential benefits of organising and going through with this attack. Furthermore, if ever successful, the attack would only affect the most recent transactions and disrupt the system for a short period.
A more serious threat to the currency’s security, in the form of hacking, is regarding the exchange of coins. This is because there is a large lack of regulations around currency exchange. Most countries have little to no regulations, and thus there are no laws or rights to protect your investments.
You could have a higher chance of being hacked depending on where you store your coins. It has been reported that those who store their coins in a wallet at an exchange are more likely to be hacked. Smart wallets are safer, but they can be hacked into as well. In addition, losing your key will likely lose the coins forever, as there is no “I forgot my password” option.
Stealing
Once you’ve invested in bitcoins, the last thing you’d want is for them to be stolen from under your nose. Similar to other currencies, there is a risk of losing your investments to common scams like phishing attacks, spoofing, and malware. If you can navigate past regular scams, you’ll probably be fine finding your way around these too.
Trading, however, can be dangerous if done through an exchange platform. There are several exchanges available to users of the currency. However, many of these are not regulated or overseen by any overarching body. A fake exchange platform could lure unsuspecting users into submitting money to invest in bitcoin, which means the money would be lost forever.
Legitimate exchange platforms can also be hacked; if this happens, there is no way to retrieve lost funds.
So, while in theory, bitcoin and its system for ensuring the security and safety of trade and investments are solid and “foolproof”, there are ways around it. However, if you know what to be on the lookout for and what types of things to be careful of, you’re more likely to be safe to trade and invest. The trick is to navigate your way through the bitcoin world with wisdom rather than indiscretion.
How To Ensure Security
Here are a few simple tips to follow to increase your security:
- Protect your private key with all your might
- Use a reliable wallet
- Research exchange services and platforms before you use them
- Consider using alternate browsers, such as TOR, for increased privacy
Should You Invest and Trade Bitcoin?
The decision is yours to make. If the question “is bitcoin secure” is still bugging you, perhaps reassure yourself with all the reasons you can trust the currency. The blockchain, which brings transparency, decentralisation, and encryption, ensures your funds are safe and secure.
Of course, there are reasons to be sceptical, but that is true. In fact, your scepticism may be what saves you from the dangers that lurk in the bitcoin world. Ultimately, you must decide on a yes or no answer to “is bitcoin secure” on your own. Nothing is secure, but you should gather, by now, if it is secure enough for your liking.
