Bitcoin Can’t Be Hacked. Right? RIGHT?!

It is said that hacking into cryptocurrencies is nearly impossible. But is it true & what can we do to safeguard the expensive and volatile Bitcoin that we own?

What’s New?

Last week, Nayib Bukele, the President of El Salvador, tweeted saying, “#Bitcoin cannot be hacked.” It is important to note that El Salvador has officially adopted Bitcoin as legal tender, and it became the first country to do so. Since he wrote this statement on Twitter, his tweet has been gaining a lot of attention around the world.

If we try to understand what this tweet means, we can see how Bukele is trying to emphasise more on the security aspect of Bitcoin. He is indicating that people were using a technology that cannot be hacked via the Chivo wallet. Despite garnering appreciation for the tweet, Bukele also attracted criticism for the tweet due to the hacker attacks on several cryptocurrency platforms.

Is It Easy To Hack Bitcoin?

The question here is, can bitcoin be hacked? Even though it is difficult to hack the bitcoin network, there is always a risk of coins being stolen from a wallet in a digital currency exchange. Until now, there hasn’t been a single incidence of the Bitcoin network being hacked.

So, How Secure Is It? Since the Bitcoin blockchain is constantly reviewed by the entire network, attacks on the blockchain itself are highly unlikely. The database maintained by this open system has never been hacked. This is because that hacking one computer’s database in insufficient to corrupt every other computer’s database. The other computers in the network will automatically alert the compromised user that their database is corrupted and will either help them fix the error or cut them out of the network. This shows how the Bitcoin blockchain is very secure, and not easily hackable.

But Are There Threats?

51% Attack: One of the most popular worries about Bitcoin’s security is a 51% attack, where a Bitcoin miner or a group of miners tries to replace or alter past Bitcoin blocks. When one or more blocks are replaced, the attacker could effectively invalidate transactions that were previously settled and steal bitcoin.

For a 51% attack to happen successfully, a malicious actor would have to control at least 51% of the total computing power, called hash rate, of the Bitcoin network. This would amount to more computing power than all other members of the network combined. As such, 51% attacks require an enormous amount of money, energy, and specialised hardware.

Quantum Hacking: Quantum hacking is the act of using quantum computers to do malicious actions. It is carried out by modern cryptographic strategies, which often use private and public keys to encrypt and decrypt data via a mathematical equation. Even though quantum computing is still very much in its early stage, governments and private-sector companies like Microsoft, and Google are working hard to make it a reality.

Quantum computers perform computation at the subatomic level and achieve extraordinary efficiency and speed. If a single entity were afforded sole access to a quantum computer, and chose to mine bitcoin, they might dominate the mining industry and have the capacity to execute a 51% attack on Bitcoin. On the other hand, a quantum computer could brute force the private keys of the wealthiest Bitcoin addresses and steal that Bitcoin. In both the cases, trust in the Bitcoin network would be undermined.

Should We Be Worried?

It is not that easy to hack the bitcoin network, because it is very expensive to do so. Since the Bitcoin network has grown and the price has increased, so too has the hash rate of a Bitcoin miner. This trend has continuously made 51% attacks more difficult to execute. So, this makes Bitcoin makes more secure. If Bitcoin’s price continues to jump, Bitcoin’s hash rate and security will continue to surge as well.

We needn’t worry about quantum computers as well because scientists have theorised about their power for several years, but a practical implementation is yet to be invented. Fred Thiel, CEO of cryptocurrency mining specialist Marathon Digital Holdings told Analytics Insight, “The National Institute of Science and Technology (NIST) has been working on a new standard for encryption for the future that’s quantum-proof.” Thiel also said, “We would have plenty of warnings if quantum computing was reaching the stage of maturity and advancements at which it began to threaten our core cryptographic primitives.” He added, “It wouldn’t be something that happens overnight”.

Zooming Out

We have shown how difficult it is to hack a bitcoin network, but if you are someone who holds your cryptocurrency in either a wallet or an exchange, it is better if you implemented some safety measures to protect it. When you sign up with an exchange, you set a username and password, but apart from that, make sure that you can add two-factor authentication to protect your account.

Philip Martin, chief security officer at Coinbase told CNBC Make It, that one can use password managers to protect their crypto wallets and warned people to not use the same password across their accounts. Apart from security measures, one should also remain sceptical when receiving outside messages regarding their crypto wallet. Martin said, “If it’s too good to be true, it definitely is.” He added, “No one on Twitter is going to send you back double what you send to them.” Bitcoin might be difficult to hack, but it is not totally impossible. So, let’s be cautious, and not fall prey for scams and hacks.

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