Have you ever wondered If crypto is really the most secure investment? Many people are discussing the level of security in the blockchain system, which is an overwhelming feature of cryptocurrencies above the traditional money and bank system. Is crypto really secure?
The main reason for creating the first cryptocurrency, Bitcoin (BTC) was to resign from the central bank authority system and make transactions as most private as possible. Every transaction takes place directly between users.
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What is blockchain? It is a technology that is used for different business functions. Blockchain is used for stored and transmission data concluded on the Internet. Technology is based on the peer to peer network, without central computing, management, and verified systems. As Bitcoin is working in a decentralized system, the only way to find any information about the transaction is to break the code of the previous block, which is almost impossible.
Can Crypto be hacked?
There is an opinion that blockchain is unhackable. Actually, there were a few accidents showing that blockchain is also vulnerable to attacks. Blockchain technology and long wallet keys should provide a higher level of security, but over time, hackers and thieves learn too. There is also the issue of the level of care for security that must be maintained by the owner of the wallet and the exchange operator.
One of the most spectacular cases was the attack on the Mt.Gox exchange.
Mt. Gox was founded in 2010 by Jed McCaleb, owner of Ripple. Since 2011, the platform has been a constant victim of hacking attacks. During the first theft 2,000 BTC were pulled from customer accounts. At the same time, 650 BTC was also bought, taking advantage of an artificially induced decline in the exchange. The computer was blamed for causing the incident and security was increased: most of the bitcoins were moved to offline wallets.
A much bigger storm was caused by the leakage of certain company documents, according to which 844,408 bitcoins were stolen by hackers, 744,408 of which were owned by customers and the remaining 100,000 were company assets. The reason for such an event was to be caused by the theft of private keys which already happened in 2011. There are also allegations that such huge losses are the fault of the company’s management or that employees are responsible for them.
Another example is the attack on the Bitfinex exchange in Hong Kong in 2016, where about 120,000 Bitcoins were stolen due to failure to maintain appropriate security protocols. It is probably the most painful incident throughout the existence of the cryptocurrency and Bitcoin.
What is cryptocurrency security?
Cryptocurrency is almost always built on blockchain technology. It’s a fairly complex, technical process, but the result is a digital ledger of cryptocurrency transactions.
Due to the definition from Techopedia: Crypto security is a component of communications security that deals with the creation and application of measures leading to secure ciphers and codes, which are used to protect encryption systems and methods from discovery, decryption, interception and tampering. This specialty area of communications security is tasked with ensuring that messages and data retain full confidentiality and authenticity.
That system makes that no foreign source will have access to the data.
Is the cryptocurrency really anonymous?
Appearance of digital assets completely changed the financial world. Allowing transactions to take place between users, without any intermediaries and immediately, is a significant advantage over fiat currencies. By far the biggest advantage users get from crypto is privacy. However, as it turns out, this is a debatable issue.
Even If cryptocurrency transaction doesn’t require to provide real names, account details and other important informations, there is no secret that major cryptocurrencies, like Bitcoin(BTC) or Ethereum (ETH) still store data transactions in the Internet, which makes them vulnerable to leaks and attacks by cybercriminals. The exception is the Monero cryptocurrency, which uses extremely complex forms of encryption, such as Stealth addresses and the signature of the Rings, which makes Monero the most secure cryptocurrency.
How to safely invest in crypto?
Investing in cryptocurrencies may turn out to be risky, but it is worth remembering that you can gain a lot from it. According to CNBC, the cryptocurrency market is expected to reach above 1,03 billion USD in 2020. So if you are interested in an investment, it is worth taking care of your safety.
Firstly, you need to find out how to store your currency.
The place where you store your crypto it is just as important as the purchase. You can store it on the digital wallet, or on the exchange. More and more people choose the first option. There are many types of wallets. When choosing, pay attention to technical requirements and security. Remember about a strong private keys that will allow you to secure your funds even more
Secondly, conduct a thorough research of exchanges.
Every new user need to learn about crypto exchanges before the investment. There are many platforms available on the market, but how do you choose the best one? Check the amount of transaction fees, security processes, as well as exchange possibilities.
We hope this article has shed some light on the cryptocurrency security.
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