Is Bitcoin safe?
When it comes to crypto-coins, one of the points that most catches the attention of investors and curious is about security. It makes perfect sense, since it is common to be suspicious of a market that came from nowhere and does not have any type of regulation.
But, after all, can we say that these virtual coins are safe? To answer this question, it is important to first understand the sense of security. The question of the risk of investing in Bitcoin today can be unraveled in three distinct points:
- Is the Bitcoin system secure?
- Is the Bitcoin market safe?
- Is Bitcoin an investment safe?
It may seem that an answer answers all three questions at once, but in this article you will see that each one deserves its due attention. So, shall we go?
Is the Bitcoin system secure?
Unsurprisingly, the world is moving fast for digital immersion. Thus, news regarding hacking attacks, system crashes and cybercrimes become more and more frequent.
Given this, it is natural that the idea of a coin that exists only virtually, without any regulation, raises some concerns. To understand the first point about Bitcoin's security, you need to understand a bit about the technology that makes it possible: Blockchain.
It is possible that you have already heard of this term, right? This system acts as a network (or chain) of records that has emerged to enable decentralized and autonomous transactions.
That is, Blockchain is a chain of information blocks that records all transactions that occur in the world in encrypted form. Thus, purchases and sales of Bitcoins, for example, depend not only on a server, but on a system that is open to all users. But how does this ensure that Bitcoin is secure?
The information stored in the blocks is automatically protected by a unique code. This "signature", also known as hash or proof of work, ensures that the system is interconnected, since each block takes its own signature and that of the previous block.
This encrypted connection makes the system extremely secure, without giving up its transparency. It is practically impossible to violate Blockchain: to access the information of a block, it would be necessary to decipher its own hash and the hash of the previous block, which, in turn, would need the antecedent hash, and thus would go on without end.
In addition, to infiltrate this system, you would need a computer with a higher power than all the computers that are connected in that system, that is, an unreachable capacity for the existing processors.
So the answer to the question of whether the Bitcoin system is secure is yes. Blockchain is so safe that its technology has been studied for many other uses.
However much your system may be invasive, we can not say the same thing about your market. How about understanding this a little more?
Is the Bitcoin market safe?
That your technology is virtually inviolable, you must have understood. But when we zoom out and analyze your market, unfortunately it's not as free from dangers like that.
Vulnerabilities in the crypto-currency market begin to emerge when there is interaction with its user. When you buy a Bitcoin, these coins are automatically stored in virtually any kind of wallet.
There are several ways to store your coins, that is, different types of Bitcoin wallets. It is possible to have wallets for desktop, completely online or even paper. It is at this point that the security of this market begins to be worrying.
Like any other file you store on your computer, the Bitcoin wallet is exposed to virtual attacks by malicious people. Typically, such attacks occur through malware that infiltrates your computer through a download or an application.
There is nothing new about this kind of attack. Once it is properly installed, this virus begins to have access to relevant information such as the address and password of your wallet, for example, and thus steal your balance.
The exchanges, which are how currency trading platforms are called, are under constant attempts at virtual attacks. There have been several cases where users of these companies were left empty-handed due to a general invasion. Here are some cases below:
- In March 2014, $ 473 million of the MtGox exchange was stolen. It was the biggest crypto steal ever recorded.
- In January 2015, $ 5.1 million was stolen from Exchange Bitstamp. At the time, the value was related to 19 thousand Bitcoins.
- In August 2016, Bitfinex had $ 66 million stolen from its portfolios. There were about 120,000 stolen coins.
- In July 2017, about $ 32 million was stolen from the Paraty Multisig Wallet portfolios. In this attack, the target currency was Ethereum.
- In December 2017, approximately $ 62 million was stolen from the great NiceHash.
Also in December 2017, the parent company of the South Korean exchange YouBit declared bankruptcy after having 17% of its criptomoedas stolen.
In addition to these elaborate virtual attacks, the Bitcoin market also registers another type of fraud: pyramid schemes.
Already known in the market, these schemes also called a Ponzi scheme or multilevel fraud, fool people who seek quick returns at all costs. With a promise to multiply their money in a short period of time, victims eventually enter the bankruptcy and buy fake crypto-coins.
To "boost" your earnings, the user is encouraged to share and bring more and more people into the scheme. For this reason, it is vital that you know the exchange well wherever you are investing and always have a flea behind your ear with spectacular promises.
The most well-known case of this type of scheme in the crypto-coins market was that of BitConnect. The platform promised the investor a return of 1% a day to anyone who bought the BCC currency, a value that was only sustainable with the entry of a large volume of people into the scheme.
This point leads us to the next question: as an investment, is Bitcoin safe? Before you leave putting your money in any currency, you need to plan and report it.