Bitcoin has gained popularity nowadays. It is a way of exchanging money anonymously. They are created for exchange, as secure transactions. Most people are afraid of investing their money in cryptocurrency. People are not sure about the security of the currency and they are also afraid of being a victim of fraud.
In this article, we are going to share some information about cryptocurrency and how secure it is. A lot of people have invested in it and are happy. On the other side, there are a lot of people who are afraid of investing in it. Let’s have some knowledge about what it is and how secure it is.
What is a Bitcoin?
Bitcoin was founded by Satoshi Nakamoto, an individual or a group of programmers, and is considered the largest cryptocurrency in the world. It is digital money and is decentralized that is not controlled by the central authority like the other currencies. It is a network and everyone participates in it, no one person or organization controls it.
It is also described as a peer-to-peer transaction in that the money is directly sent to the sender without any need for a third-party facilitator. These are sent to a Bitcoin address and can be sent to anonymous addresses if the address for the transaction is unknown.
The bitcoin transactions work on a blockchain protocol, that tells the computer about adding and verification of the transactions. These blockchains keep all the history of the transactions and no person can change the information and data.
What Is Bitcoin Mining?
Bitcoin mining is the process through which the user validates the Bitcoin transactions. They also release new Bitcoin at a consistent rate and make them secure too. There is mining software that is used to mine Bitcoin. A small introduction as you will see the term bitcoin mining while discussing the 51% attack.
Is Bitcoin a Risky Investment?
Bitcoin is a risky investment, the person who can tolerate the loss should invest in it. And is recommended not to invest all or a huge amount of money in this. As the rates of the currency often fluctuate, sometimes go up and up and there may b chances of sudden fall in rates.
As they offer the potential for high returns and its decentralized. But you should also consider that the transactions are irreversible and many people have lost money in this trade. The price can go down anytime as it trades 24/7 and unlike other currency exchanges, there is no pause in trade when the prices go down dramatically.
How Secure is Bitcoin:
Bitcoin blockchain is considered a secure network. A lot of people declared it as an unhackable technology. Bitcoin is constantly being reviewed and audited by the network community, making it less vulnerable to hacking attacks. The increasing number of stakeholders that are interested in the success of Bitcoin technology makes it more secure.
Cryptocurrency uses advanced encryption technology and transparency of all Bitcoin blockchain transactions. And anyone if wanted to run any node has to download the entire transaction history of the blockchains. Such a high degree of transparency has made this technology more secure.
Besides all the securities, there have been noticed cases of cryptocurrency hacking in the past, but this does not mean that the security of the Bitcoin network is not strong. This was done on the user end due to improper security practices and the negligence of the stakeholders.
It is most important to use the best security practices related to the Bitcoin services you use. Coinbase, on behalf of the users (that are not much trained and are not aware of computer security) manages a lot of these security measures for them. It stores the Bitcoin in encrypted form in geographically separated offline storages.
Uptime For Bitcoin:
Among all the cryptocurrencies bitcoin is the most secure one as it has never been attacked successfully by hackers, even not a 51% attack.
Besides hacking bitcoin has never faced downtime, not even a short period of time. Bitcoin gave a 100 percent uptime for the last 10 years.
Bitcoin failure is possible if a massive down in power occurs around the globe or there will be an unnoticed and undetected bug in the Bitcoin protocol that may cause downtime temporarily in the network.
Though the blockchain network is highly secured, a few incidents have been noticed, unfortunately. These incidents are attacks on the smaller blockchains, not Bitcoin. Hackers can take over a blockchain, can steal the tokens from the Bitcoin wallet or through the cryptocurrency exchange.
There are a few ways through which these attacks can be possible.
A 51% attack, can be possible if the hackers control more than 51% of the mining process. This is not an easy task to achieve as it requires a lot of resources to do this which we will discuss later.
Errors during the creation of the blockchain are another possible way to provide a door for hacking attempts. Whenever such errors occur and hackers become successful in finding vulnerabilities they may be able to steal money. As the blockchain transactions cannot be altered and due to decentralisation the users unfortunately can’t get their money back.
Insider hackers are also present. They are anonymous as crypto is. They are actually the people or developers who created the protocols. They leave the vulnerability and can steal the amount if they got successful in their mission. It is too difficult to recognize such persons.
Hot wallets are wallets that are connected to the internet in any way. It also refers to keeping your private keys in any device, like a laptop or mobile device that is connected to online activities is also risky and vulnerable to attacks. The best practice is to save your private keys in cold wallets.
Poor Security Practices are Another Way of Making:
cryptocurrency is vulnerable to hacking attacks. Often the users during the exchanges had weak security practices, this will make it easier for hackers to attack and get access to the data.
Stealing money from cross-chain bridges, which are designed to migrate the tokens between the blockchains. Hacking incidents occurs on these bridges in recent years. In 2022, a loss of 100 million dollars has seen the cross-chain bridge on the Harmony blockchain.
Let’s have a look at these.
A 51% attack is a possible threat that could happen to steal Bitcoin. This can be done only if the miner or a group of miners could be
able to take control of most of the mining power. In this way, the theoretical history of Bitcoin transactions can be overwritten or changed.
As it is obvious from the name 51% attack is only possible if the hacker (miner or group of miners) will be able to get control of more than 51 percent of the total hash rate (the computing power) of the Bitcoin network.
51% attack is however not an easy task. It requires specialized hardware, a lot of money, and energy to get control. Due to the rising prices and growing networks, hash rates and security have raised as well. This made the 51% attack more difficult to execute.
Hacking Attempts on Cryptocurrency Through Bug Vulnerabilities:
Expert and skilled hackers can also exploit vulnerabilities they may find in the blockchain’s code. This is only possible if the blockchain coders make a mistake while developing their projects, and they were unable to find or fix it in time. If any flaw is caught by any hacker, this may lead to a loss worth millions of dollars.
However, this is also possible for the smaller blockchains, but not for Bitcoin. In 2022, a new Ronin Blockchain created by Vietnamese company Sky Mavis has been exploited by North Korean hackers for more than 620 million dollars.
Vulnerabilities in Crypto Wallets code:
Many hackers attempt to find the vulnerabilities in the crypto wallet codes, so that they may find some holes to hack the wallets to steal coins. Hackers also attempt phishing attacks to get the personal confidential information from the wallet holders and they also attempt to get their private keys to access their crypto credits.
Like in 2022, some hackers successfully drained the Solana-based wallets due to the bugs in the Slope wallet. The investors have faced a loss of token costs of around 8 million dollars in this attack.
Another great target for hackers is the centralized crypto exchanges (CEXs) that store crypto worth billions of dollars. High-profile CEXs implement more security like two-factor authentication to secure their crypto. Other keep them in cold storage to make their crypto secure. Some CEXs offer you insurance protection. They technically own your crypto until you withdraw it from your private wallet but they never guarantee to return your money after hacking.
Mt. Got was one of the famous centralized crypto exchange hacking attacks. It occurred in 2014, hackers stole 850,000 BTC from the Mt. Gox exchange. Those who were affected by this attack still could not claim their lost crypto.
Smart contracts perform various functions automatically without the intervention of humans. These are blockchain-based programs that perform their functionalities when the predefined conditions come true.
Now if we talk about the security level of these smart contracts, so it is as strong as the developer code will be. If the developer made a small mistake, the hacker will have the chance to get in.
DAO (decentralized autonomous organization) attack was a well-known incident of Smart Contracts. There was a project of Ethereum, for funding decentralized capital ventures. Due to the weakness in code, the hackers were able to get access, and a loss of about 60 million dollars was faced by the investors, in 2016.
Security Practices to Prevent Your Crypto Assets from Being Hacked:
There are a few tips for securing your digital money from being attacked by hackers. Strictly following these tips will decrease the risks of losing your money.
Always use 2FA:
2FA stands for 2-factor authentication. Different crypto wallets and cr exchanges allow you to use the 2-factor authentication services for the security of your crypto. The second factor will add additional security and there will be lesser risk of hacker attacks.
Investing in Hardware Crypto Wallets:
There is a much lower risk of hacking if you will use cold wallets (crypto hardware wallets). These wallets are USB-like devices that you can buy to store your private keys offline.
Never Ever Share your Wallet’s Private Keys:
Your wallet’s private keys are so precious and important for the security of your wallet. These keys are the strings of words that you type while setting your wallet. Never let anyone know your key and write down your key on any paper and keep it in a very safe place.
Beware of Unknown and Smaller Crypto Projects:
Always choose the successful and larger project as they are more secure and always stick with dapps, crypto exchange, and tokens. Projects with huge% following and larger success track are less vulnerable to hacking attacks and smaller and unknown projects are an easy target for hackers.
Among all the cryptocurrencies Bitcoins are more secure and have a great 100 percent uptime. It is less vulnerable to hacker attacks and has never been hacked.
Though there are risks with the cryptocurrencies that we have discussed in this article. And also precautions and security practices are present to make your crypto assets secure.
Most of the attacks were the wrong security practices and faults of humans, which result in major losses. So, if you want to make your crypto secure you should learn all the methods for securing the crypto. You should also be aware of all the security practices and put all your efforts into placing the private keys in secure places, strongly recommended offline storage.
Hope this article has given you the information you were looking for. Thanks for visiting.
This article is totally for educational purposes. We are not recommending or promoting investing in any type of cryptocurrency. We are also not taking any responsibility for the risks or security of any type of crypto assets. The article is totally based on the data available online.
If anyone is interested in, or investing in these networks he will himself responsible for all the risks related to these networks