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Security issues to know when using Bitcoin

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24 November 2021   |   6:29 am
Bitcoin technology is undoubtedly safe. However, no technology is 100% secure. Despite being a prominent and successful cryptocurrency, Bitcoin has security issues that users should know. Whether you want to invest in this digital currency or trade it, understanding the risks surrounding its use is crucial. Here are the primary security issues that every Bitcoin…

Representations of the Bitcoin cryptocurrency are seen in this illustration picture taken June 7, 2021. REUTERS/Edgar Su/Illustration

Bitcoin technology is undoubtedly safe. However, no technology is 100% secure. Despite being a prominent and successful cryptocurrency, Bitcoin has security issues that users should know. Whether you want to invest in this digital currency or trade it, understanding the risks surrounding its use is crucial. Here are the primary security issues that every Bitcoin user should know.

Bitcoin Is Extremely Volatile
The Bitcoin network employs secure cryptography. However, some people argue that it’s not safe as an investment due to its volatility. Bitcoin has an international market that runs 24/7 without a regulatory body. Thus, this virtual currency can be worth $60,000 today and then drop to $30,000 the next day.

Although this virtual currency has experienced stability in some days, this period doesn’t last long. Thus, investing in Bitcoin is risky due to its extreme volatility.

Cyber Attacks and Hackers
Most people trade Bitcoin on crypto exchanges like https://bitcoin-eraapp.com/. After purchasing this virtual currency on such platforms, people send it to their digital wallets. Unfortunately, criminals have hacked such systems in the past. Although the value of this digital currency slumped afterward, some people fear that one attack might cripple this digital currency completely.

While criminals might not hack the blockchain itself, crypto exchanges can be their soft target. What’s more, anybody can get a private key and use it to wipe a digital wallet clean without the owner realizing it. And hackers keep looking for ways to steal from Bitcoin users. Currently, the Distributed Denial of Service attack is a significant threat to Bitcoin exchanges.

Losing Bitcoin Passwords
People store Bitcoins in crypto wallets. Forgetting the password to a Bitcoin wallet means the user loses their funds. That’s because you don’t have a central authority that can help you recover the account. Over the years, several individuals have lost their funds after forgetting the password to crypto wallets.

51% Attacks
The 51% that people associate with Bitcoin is a security concern for this digital currency. Although executing this attack is not easy, it’s possible. Bitcoin mining is becoming increasingly difficult. For this reason, miners are joining pools to combine computational power.

If a Bitcoin mining pool becomes extremely powerful, it can command more than 51% of the overall mining power. That way, the group can threaten the Bitcoin network. That way, the group can manipulate Bitcoin transactions by double-spending or generating “invalid” blocks.

Using ASICS mining rigs implies that most miners can use pools to do it. And some mining pools have extensive power that they can misuse.

Double-Spending
The Bitcoin network has instituted reinforcements to mitigate this security concern. However, some people fear this when handling Bitcoin transactions. Bitcoin is getting sturdier against possible coordinated double-spends. Nevertheless, some people can constitute attacks and benefit from spending a coin twice in a transaction.

For instance, somebody can send a merchant x bitcoins after purchasing items from them. At the same time, the same person can complete a similar transaction by sending the same amount of Bitcoin to another address under their control. Thus, the merchant might believe that the customer has sent the funds and not even confirm it. However, the customer’s address might receive the coins, meaning the merchant won’t receive the funds.

Due to Bitcoin transactions’ irreversibility, the merchant can’t invalidate the transaction. And the merchant has no recourse since there’s no authority regulating this virtual currency.

The Bottom Line
Bitcoin’s security issues are about its use, not the blockchain network. Therefore, Bitcoin users can remedy most of these issues to avoid exacerbating this virtual currency’s problems. Nevertheless, every Bitcoin trader or investor should know these concerns and their potential effects on their investments.

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