How Secure is Bitcoin

Submitted by editor on Tue, 03/20/2018 - 23:39

The security of your Bitcoin basically lies with you. No one else can be trusted to look after your interests with regard to your Bitcoin.

Bitcoin security threats can include:

Not keeping your passwords safe
Giving others access to your Bitcoin
Leaving your Bitcoin in exchanges rather than in an offline wallet
Responding to emails and requests for information about Bitcoin, such as 'checking your security, access log in on exchanges' and other phishing attempts

How secure is Bitcoin?
By itself Bitcoin on the blockchain is highly secure. It takes a long encryption code to transfer Bitcoin from one wallet to another. The Bitcoin network has grown to be the largest network on the planet and although the blockchain is transparent the transactions are anonymous in that names and identifying details are not attached to the transactions which are simply long strings of numbers. It is impossible to change or hack into a transaction once it is confirmed and completed as it is a record that is duplicated across millions of 'nodes' or computers around the globe. And, although one might attempt to change one computer record, this would be rejected as not in agreement with all the others.

This does not stop hackers trying to get into the network and or hacking accounts or wallets. If one's wallet is offline then a hack is impossible but exchanges sometimes have security flaws which hackers can find and exploit resulting in a hack of the Bitcoin. This has happened on more than one occasion and is the result of the exchange not employing secure measures to protect their wallets.

So Bitcoin security risks are therefore all largely relating to human error or activity. How do you look after your Bitcoin? Do you keep your Bitcoin safe and off line so it is unreachable by others?

Exchanges
Many people keep their Bitcoin on an exchange. They log into the exchange and their Bitcoin is residing there in a wallet they access when they log in. The weak points here are one the log in and two the exchange itself. An exchange is a prime target for hackers as the rewards, if succeeded, are great. We are talking millions of dollars’ worth of Bitcoin, rather than one person’s few Bitcoins. Notable examples are the Japanese Mt Gox, S. Korean Youbit, and the Japanese Coincheck. So parking one's Bitcoin on an exchange has its potential issues. It is probably a good idea to only keep the Bitcoin one is going to use for trade on an exchange and the balance of one’s asset keep off line in a hard or cold wallet

Human Error
By far the Bitcoin security best practice is to keep your assets off line in a hard wallet. No one has access and your Bitcoin is fully secure that way. You only go online to update and or spend Bitcoin and once that is done you remove it from the network again.

Also do not answer or respond to any emails purporting to come from an exchange or anyone else requesting you to confirm or perform some activity relating to your account. The chances are it will be a phishing scam to extract details of your exchange account or wallet in order to remove any Bitcoin you may have. As an additional tip, when you receive an email containing a link for you to go to. You can check what the real link is rather than what is stated in the email by hovering your mouse over the link and checking in the bottom left hand corner where the real link is usually shown and more often than not it is a totally difference address.

If in any doubt still do not click on the link but go to your usual account in the usual manner and see if there are any issues. Usually there are not, which tells you the email was a scam and should be deleted.

Again, keeping your passwords and wallet keys safe and out of view is vital. Better kept on a USB drive that you ONLY plug in there you need access and otherwise kept unplugged in case your computer is subject to a general hack and or phishing attempt.

When it comes to Bitcoin security, basically common sense is the key here. Applying the same if not better security for your Bitcoin as you would your bank accounts or other valuable assets.

This article is for information purposes only and is not to be construed as financial information for any purposes such as investment or speculation and it is the responsibility of the reader to perform proper due diligence before acting upon any of the information provided. We recommend that you consult with a licensed, qualified investment advisor before making any investment decisions.