Since being launched, there have been a great deal of controversies surrounding the idea of bitcoins. Previously, digital currencies had not reached the level of popularity that bitcoins have today, even after their decline in 2014 after Mt. Gox’s famous failure. Rather than fading into obscurity, this digital currency seems to have made quite a name for itself. Whether a person is supporting or mocking bitcoins, they are mentioning them. But is this particular form of digital currency famous, or infamous?
Regardless of one’s stance on the coins, information seems to be in short supply to the general masses of people who might be curious about joining this seemingly-growing trend. The number one question people seem to have now is this: Is Bitcoin a secure platform for business?
To answer this question, let’s have a look at the way Bitcoin transactions work. The design is rather clever. To start with, the user must create a “wallet” on their computer or phone. Start interacting by either purchasing or mining (computers solve complex math equations and eventually generate coins) them. Each individual coin is tagged with a numerical signature which identifies it as belonging to the owner. Creating a wallet automatically generates an address. The user can share their address with others so that they can exchange coins for whatever the desired amount is. It is recommended that each address be used only one time. Each of the transactions is recorded in Blockchain, which is a public ledger. The transaction is confirmed, and then processed.
How safe is Bitcoin? The fact is, it is a bit less safe than your average bank account. A startling one in every sixteen bitcoins belong to someone that has stolen them. Since 2009, it has been estimated that approximately $500 million worth of bitcoins have been stolen. Each wallet can be accessed with a private key, and once that key is stolen you can wave your money goodbye. Dell estimates that there are around 140 viruses in existence specifically for the thievery of bitcoins. 22% of all financial malware attacks target bitcoins. More than 12 trading establishments have been hacked and stolen fro, including the infamous Mt. Gox incident. That hacking alone costed millions of dollars. Consider this: people who have fallen victim to credit card theft may cancel the card, or reverse the fraudulent transactions. This is not so with Bitcoin. Transactions though this platform are final.
The good news is that, if digital currency is your dream, there are ways to protect your digital treasure trove from pernicious thieves. Though there are no foolproof methods, these are a few tips to avoid being left bereft.
First, wallets are accessed by private keys. The user should never store their wallet and private key in the same location. Users should use only their own PC or phone for bitcoin transactions. For additional protection, the user may spread their holdings out in multiple smaller wallets. If one wallet is hacked, the others remain secure. The loss is minimized. Multiple wallets can be set up on various platforms, including web, desktop, mobile, and offline. It is also recommended that users back up all of their wallets on an offline hard drive. Third-party software can offer the advantage of encryption. DiskCrypor or BestCrypt have been listed as ideal for this purpose. Users may also update their online wallet software, use Deep Cold Storage (which means, they may encrypt the wallet and put it in an offline drive), or may even consider using BTC paper wallets that can be stored in a safe.
For those interested, a “paper wallet” can be printed from the safety of a user’s home, with materials purchased on the website ubiquitously titled “bitconpaperwallet(.)com.” These wallets are tri-fold templates in order to keep people from “candling” (using a light to see hidden information on paper) and hologram stickers are in place to prevent the wallet from being opened without the owner’s knowing. These stickers are serialized, to avoid people simply replacing them. The private key is hidden under the fold, behind a security pattern.
Overall, the risk of using bitcoins seems to be high, but preventable. Hackers cannot access offline drives, paper wallets, or coins placed in Deep Cold Storage. The obvious advice is that bitcoins should eb treated cautiously, like any kind of money should be. Though more secure now than they were previously, those thinking about investing should carefully weigh the pros and cons of involvement before taking the proverbial plunge. Fred Wilson, a Bitcoin proponent, said that ” without [better security], I don’t think we’ll ever get enough confidence and trust in the system for people to really start using it.” Wilson also stated that security measures have the chance to be a form of profit stemming off of the increasingly common use of Bitcoins.