Bitcoin is an application that is based on the blockchain technology. This technology utilises a range of protocols, including cryptography. Bitcoin, and the blockchain technology in particular, have a strong track record when it comes to security. Bitcoin has been in existence for over 10 years and there has been no known successful attacks on the protocol. Therefore when asked the question ‘is Bitcoin safe?’ The answer is absolutely. However, this doesn’t mean you should drop your guard.
The Bitcoin network is the largest distributed computing project in the world. There are millions of participants worldwide that is involved in Bitcoin. They can be coders, miners, investors, traders or simply users. As such, Bitcoin’s most common vulnerability is user error. Bitcoin wallet files that hold private keys can be accidentally deleted, lost, or stolen. This is similar to physical cash, but in electronic form. Although the Bitcoin will always be there, it is very possible for them to end up in the wrong hands if you are not careful!
Attacks on Bitcoin
There are many attacks on either an individual’s wallet or a Bitcoin exchange. You can think of these perpetrators as thieves roaming the streets of a busy market. They may pickpocket individual shoppers or simply aim at robbing the stalls for bigger prizes. At an individual level, some well-known methods of attacks include ‘phishing’ (which is aimed at stealing your private keys), placing of malicious software and sending false emails. These attacks can catch many unsavvy users off guard – especially if they are not familiar with the blockchain technology. For someone who has sound computer literacy and understand the technology behind Bitcoin, the risk is lower.
At an institutional level, the most well-known attack related to Bitcoin is probably the infamous Mt Gox hack that occurred in June 2011. During this attack, hackers stole more than 25,000 BTC from the Mt Gox exchange, which directly led to its bankruptcy. However, this hack relates to the hacking of an exchange. This is far from a successful attack on the Bitcoin protocol itself, which hasn’t happened since the inception of Bitcoin. Further, since the Mt Gox attack, it is now common to see that major exchanges now either fully insure themselves or have a ‘reserve fund’ to cover users’ losses, should an successful attack take place.
What can I do if I lose my Bitcoin?
Unfortunately, there is not much you can do if you lose your Bitcoin. Bitcoin is very similar to cash but online. Once you lose your Bitcoin, it is likely you lose them forever unless you catch the perpetrators. Due to its decentralised nature, the ownership of Bitcoin is entirely dependent on who has control of the private keys to the Bitcoin addresses. Once you hand over this control, recovery is unlikely.
In summary, exchanges around the world now protect themselves much better, both technologically and financially, against any hacking attempts. In contrary, risks still persist when users decide to safeguard their own coins – they are subject to user error and the possibility of being scammed. This is why that many users decide to leave their Bitcoin with reputable platforms like Coinstash.com.au. This is similar to leaving your money in the bank – let the experts safeguard your wealth.
Coinstash is a registered digital currency exchange based in Australia. Our customers praise Coinstash as one of the most user-friendly, educational and supportive platforms. Through its live support 7 days a week, Coinstash has accumulated numerous positive reviews from its customers. Coinstash is also one of the only digital currency trading platforms that has participated in Australian government Austrade’s landing pad program.
Note nothing in this article should constitute general or specific financial advice. Coinstash does not take into account your circumstances when publishing articles. Any content on Coinstash.com.au or related domains are informational only.
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