Can Bitcoin be Hacked
Bitcoin has hit an all-time high of $9985. With the cryptocurrency becoming more valuable, stakeholders and spectators are wondering just how safe the digital currency is from hacking. In theory, there is a slim chance that bitcoin can be hacked, but pragmatically, the effort that would go into pulling off such an undertaking would not be feasible from a cost-benefit perspective.
More than that, it would also take a lot of luck to make it happen. Before looking the slim chance that exists on how bitcoin can be hacked, let us first look at what makes it so secure.
Why bitcoin is so secure
Bitcoin is based on the blockchain technology which makes it very secure. To understand why bitcoin is so reliable, therefore, one has to comprehend what blockchain is and how it works.
How blockchain works
Blockchain is a decentralized ledger system that is distributed across its entire user base making it open while simultaneously making it almost impossible to alter the contents. As the name implies, it consists of blocks which are transactional entries linked to each other in a chain like manner using cryptography.
Once a block has been added to the chain, the chances or altering it are slim if not nil. Thus, only new blocks can be attached to the chain with old ones remaining highly resistant to modification.
This high resistance to modification is because blockchain is a peer-to-peer powered system. Each user plays a part is sustaining the system by holding a tiny fraction of the entire whole. To change the information contained in a single block would require the coming together of users in unity of purpose which is very unlikely. Factoring in that users number into the millions and are spread over the world, a dire security threat becomes very improbable.
Other ways in which bitcoin can be hacked
As has been established, bitcoin is secure to traditional hacking, but that does mean that some level of influence cannot be imposed on the cryptocurrency by those powerful enough. The most popular method touted by digital security experts regarding the hacking of bitcoin is the 51% model. It can happen if an unscrupulous individual or cartel manages to gain over 50% influence over the system.
Bitcoins are generated through mining which is the solving of difficult mathematical problems based on stringent parameters after which one then makes 25 bitcoins. Even if one solves a puzzle, the BTC25 reward is given after another 99 blocks have been added onto the blockchain. The system is such that there is an incentive to participate as well as gain profit for miners, but achieving all this comes down to computing power.
To increase the probability of getting rewards by solving the aforementioned puzzles, miners pool together their resources. In 2014, a pool known as GHash.IO got to the 51% control mark for a short while, but not long after, several of the players in the pool switched to other pools which diluted GHash.IO’s influence. Reason prevailed given that no one wanted to bite the very hand that nourished them.
Hacking bitcoin wallets and exchange sites
Individual users are not immune to thieves stealing their coins and considering it is a digital currency, the stealing of bitcoins can be viewed as hacking. The same way a pickpocket can steal a wallet is the same way a crafty, skilled digital thief can take off with bitcoins if security measures are not upheld.
This has happened often, both to individuals and organizations. In the Bitstamp case, criminals took off with coins worth $5.1 million. The more popular heist occurred in Mt. Gox in Japan where an attack resulted in the loss of coins worth $460 million. After this attack, bitcoin collapsed temporarily with prices dipping by more than a half in less than 12 months.
The quantum computer concern
Due to the reliance of bitcoin, and by extension blockchain, on computing power, experts propose that in 10 years, the risk of hacking will be more pronounced courtesy of the projection that quantum computers will come of age. Stakeholders are driving awareness and calling for preventive solutions to be identified and implemented.
The media drives alternative
In the U.S, six companies control more than 90% of the information that the public consumes. If these companies were to come together and peddle propaganda and run smear campaigns targeting bitcoin, there is no doubt that the currency would suffer. But this also would only be a psychological hack that would harm the cryptocurrency rather than a typical hack.
Final thoughts
Bitcoin has more users now more than ever which makes it a much harder task to affect the cryptocurrency in any way. In fact, bitcoin is one of the most secure currencies, and it will remain so if quantum computers do not change the blockchain sphere in ten or so years. Find out more about bitcoin by checking out content on bitgale.com – a site that is passionate about all things digital