All monetary institutions have fallen victim to either successful or attempted hacking attempts. Even the Federal Reserve has been reportedly hacked 50 times in the past four years. With these types of statistics, it’s easy to believe that a conglomerate like Bitcoin might have also fallen victim to a predatory attack. After all, if someone really wants to hack a company, they just need the right skills and technique to do so. However, a properly protected company like Bitcoin can often shield themselves from serious damage and protect both business and customer interests.
Security Flaws Vs.Hacking
It’s no secret that a criminal with intent and the expertise necessary for the job can hack virtually any system. Bitcoin is essentially an open system, and this means that it is vulnerable to hacking attempts just like any other open system. However, the unique security protocols that are used for their proprietary cryptographic features make it possible for them to maintain an extremely tough system that is mostly immune to attacks.
While no security software is perfect, risk can be mitigated by using a team that is highly capable of responding to and detecting threats in real-time. As software matures, security flaws are found and repaired to make the software safer. When reports about Bitcoin hacking make it to the media, there is almost always an end-user to blame and it’s rarely the fault of the software itself. Bitcoin itself is inherently a very safe system. Theft and security breaches that occur as the result of using a provider that accepts Bitcoin aren’t an indication of the security of the software.
The Truth About Bitcoin Security
There have been numerous reports in the news lately about major retailers falling victim to attacks. Target is just one example of a major corporation that let its guard down and lost valuable customer financial information. Nobody blames VISA or MasterCard for the breaches, and the blame falls squarely on Target’s shoulders. Since the retailer is the one that failed to follow best practices for protecting consumer information, it is the retailer that is the reason for the lapse in security.
All of the hacks that are related to Bitcoin have been due to infrastructure issues. The currency of Bitcoin and the protocols that the company use have never actually been the target of an attack. It’s really the storage of your Bitcoins, the security of your system and the practices employed by merchants that are the reason for hacking reports.
Protecting Your Bitcoins From Theft
If you really want to protect your information, do what the big financial institutions do. They don’t keep all of the money in their branch in the teller’s front cash register. Instead, it’s stored in a major vault located on or off premises to reduce the risk of theft. While there are secure methods that you can use to store your Bitcoins safely, the best way to protect yourself is to store your Bitcoins offline. Similar to a bank’s vault, by storing your Bitcoins on a computer that is disconnected from the Internet, it’s virtually impossible for a hacker to gain access to your money.
Many Bitcoin users opt to store their Bitcoins online or in a hot wallet. This is one of the least safe options available, and many of the providers who offer to store your Bitcoins won’t offer to reimburse your coins in the event of theft.
Bitcoin Requires No Trust
The system is open-source, which means that anybody with the expertise necessary to evaluate code can see exactly what’s going on. While some may consider open-source software to be less secure, the opposite is actually true. Since everyone can contribute to the security of the software, security flaws are often detected much more quickly and developers can patch issues in less time.
All payments are made in complete transparency, which makes it very difficult for the system to experience a successful hacking attempt. No system can exist with certain individuals trying to abuse the infrastructure, but the advanced cryptographic algorithms that are used make it secure even in an openly hostile trading environment. Since the user has complete control over all transactions, it’s less likely that a true hacking attempt can be successful.
Resolving Privacy Concerns
When it comes to sending Bitcoins, the system is designed to provide only the bare minimum of personally identifiable information. This means there is less information for a hacker to obtain in case a security breach does occur. However, one misconception is that Bitcoin is completely anonymous. The system does not offer the same privacy that a cash transaction would incur, and you leave behind fairly extensive public records when you use the system. However, there is a very strong system in place that protects user privacy, and these protocols are being developed continuously.
Crime is less of an issue than people tend to think, and the system is regulated much like any other financial system. If the government wishes to probe records for incidents of drug trafficking and other crimes, they may do so. It is not a system that is designed to prevent legitimate criminal investigations from taking place. The system is also designed to block a large number of financial crimes, and the developers do aim to provide a safe and legal system.
With Bitcoin, people can perform transactions on terms that suit them. This gives a large amount of freedom in how individuals manage their money. It also means a lot of responsibility on the part of the user to keep their Bitcoins safe. The system is secure, but it’s up to the users to prevent hacking attempts by maintaining a secure home computing environment.