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Is Bitcoin Secure?

, June 13, 2015

One of the main issues that has been holding back mass adoption of Bitcoin as a payment system and currency is the notion that it is not secure. There have been plenty of hacks and frauds in the Bitcoin ecosystem, so people who are unsure of the digital currency cannot be blamed for their unwillingness to join the cryptocurrency revolution. These early security problems should come as no surprise to anyone involved in the field of computer science, but those entering Bitcoin from a financial background will want nothing to do with the currency until the payment system can be made fool-proof. Although there is technically nothing insecure about the Bitcoin protocol, it does take the responsibility of storing money away from banks and in the hands of the people.

What About All the Bitcoin Hacks?

Many people do not believe that Bitcoin could possibly be secure due to the large number of hacks that have taken place on various wallets, exchanges, and other related services. While it is true that some Bitcoin services have been built in an insecure manner, the fact of the matter is that these applications are not part of the base Bitcoin protocol. In other words, nothing has found to be broken in the Bitcoin payment system that users are able to use in a P2P manner. The only problems that have popped up have been when Bitcoin users have decided to either store their bitcoins in an insecure manner or place the responsibility of those coins in the hands of a third party. One of the reasons Bitcoin was created in the first place was to remove third parties from the financial system, but that hasn’t stopped people from storing their bitcoins with services such as MtGox and inputs.io. Although it is definitely true that more user-friendly applications need to be created for users who wish to store their bitcoins securely, this is not something that cannot be solved over the next few years.

How Do We Know Bitcoin is Secure?

Due to the fact that Bitcoin is based on nothing but computer code and mathematics, there are plenty of people out there who are skeptical as to how we can know there is not some unknown flaw in the system. The reality here is that we can never know with 100% certainty whether or not Bitcoin does not have any bugs. Having said that, it is extremely unlikely that there is some exploit in the code that could be used to steal everyone’s bitcoins. The original Bitcoin software is completely open source, which means anyone who knows how to code can take a peek behind the curtain to see what’s going on behind the scenes. Some of the world’s most respected hackers have scrutinized the code since it was first released in 2009, and no one has been able to find a flaw that could actually lead to the end of the Bitcoin experiment. It can also be assumed that there are many hackers who are looking over the code on a daily basis to see if they can find a bug that can be exploited for financial gain. With the market cap of Bitcoin in the billions of dollars, there is a rather large incentive for someone to find some aspect of the code that can be used to wreak havoc.

The Future of Bitcoin Security

For Bitcoin to succeed, people are going to have to change the way they view their responsibility over their own money. There is no point in allowing third parties to hold everyone’s bitcoins and keep them secure because the destruction of these various banks and institutions is one of the very reasons Satoshi released the software upon the world at no cost. For now, it seems that various hardware devices, such as the TREZOR, will be the best option for secure Bitcoin storage and transacting over the short term. These devices make it easy to sign transactions with private keys without having to place those keys on an Internet connected computer. As long as the keys are offline, no one can access them without physical access to the device.



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