Why is Bitcoin known as “hack-proof”?
Bitcoin is deemed hack-proof because the Bitcoin blockchain is regularly examined by the whole network. As a result, cyberattacks on the blockchain are extremely improbable. Each participant (miner) who maintains Bitcoin’s ledger is constantly solving complicated arithmetic problems in order to create a new block containing a collection of transactions.
The cryptographic hash function of Bitcoin generates very challenging arithmetic issues. When a new block is added to the database, every node in the network must agree on its validity. The Bitcoin ledger is updated only when all nodes agree.
It is incredibly tough to manipulate a cryptocurrency network. The decentralized, historical, and processing, power-intensive aspects of the Bitcoin blockchain make erasing or overwriting a block of previously spent Bitcoin, known as “double spending,” difficult.
What happens when an attempt is made to hack the Bitcoin blockchain?
The Bitcoin blockchain, as you are aware, does not exist in a single copy. Meanwhile, hundreds of copies are kept on computer network nodes. These nodes are spread across the world and contain all of the Bitcoin transactions that have occurred thus far.
To change the distributed ledger of Bitcoin or any other network based on blockchain technology, a hacker would need to compromise not one, but more than half of the participating computers (51 percent attack).
A 51% attack is what it sounds like
The most serious threat to blockchains is a 51% attack. This is an example of a scenario: The transaction history of the Bitcoin network might theoretically be modified and erased if a single individual or organization succeeded in gaining control of a majority of the network’s mining power (hashrate).
To select which transactions to allow and which to reject, a majority (therefore 51%) is always necessary. This means that a majority of 51% might theoretically change a blockchain’s distributed ledger in such a manner that double-spending (executing the same transaction multiple times) is authorized. This circumstance, on the other hand, is exceedingly difficult to produce and extremely improbable to occur.
Is it possible to shut down or turn off Bitcoin?
Bitcoin has never been effectively 51% attacked, and it has never been taken down, even for a short period of time. Many players, including government institutions and financial professionals, have recommended shutting down the Bitcoin network in the past, but Bitcoin has been running with over 100% uptime for nearly ten years.
There are only a few scenarios that might lead to the elimination of Bitcoin as we know it. For example, a catastrophic worldwide power outage that shuts down all communications and the internet throughout the world might prohibit network nodes from communicating with one another, leading the system to fail.
Example two: a Bitcoin upgrade has a significant issue that goes unnoticed despite the Bitcoin protocol’s extensive testing and peer-review. A circumstance like this would almost certainly result in a short disruption of the network, a sharp decline in the price of Bitcoin, and a fork in the blockchain.
The network as a whole cannot be shut down by a single authority since Bitcoin is decentralized. Governments have tried to outlaw cryptocurrencies in the past, or at the very least, to restrict their usage in their jurisdictions. Governments may yet try to prohibit Bitcoin collectively. In the long run, however, governments are considerably more inclined to create rules in order to protect individual investors and collect taxes.
Then there’s the (unlikely) possibility of a 51% attack. To topple the Bitcoin network, 51% of network participants would have to join together, risking their own gains. Such theft is also highly improbable because it would need large investments in mining equipment.
On top of that, new and purportedly enhanced cryptocurrencies are being launched in the market on a near-daily basis. In terms of investment, such changes raise the risk of market exhaustion. When everyone has invested in an asset, there are no more buyers to sell to when they wish to sell, leading to a price drop.
Bitcoin, on the other hand, has been holding its own for almost ten years and is quite likely to maintain its reputation as a store of wealth.
Why are bitcoins stolen?
The majority of security flaws in the cryptocurrency industry may be ascribed to individuals and websites failing to take adequate precautions. Stolen monies are typically the result of keeping cryptocurrencies in unsafe locations.
A “hot wallet,” for example, is any cryptocurrency wallet that is linked to the internet or “online” in some form. Hot wallets are wallets on desktops or mobile devices, as well as wallets hosted on exchanges that lack cutting-edge security features. A hot wallet can also refer to wallet private keys that have been carelessly kept on a hacked device.
Mt.attack Gox’s is most likely the most egregious example of inadequate security and cryptocurrency theft. Mt. Gox was a Japanese exchange that was relaunched as a Bitcoin exchange in 2010. Hackers were able to steal more than 850,000 BTC due to poor security measures. The Mt. Gox hack was the largest since Bitcoin’s inception and ultimately resulted in the exchange’s bankruptcy in 2014.
Fortunately, this tragedy educated other exchanges throughout the world a lesson. Since then, many exchanges have introduced impenetrable security mechanisms. Nonetheless, we encourage that all cryptocurrency users exercise safe practices and read our article on safely keeping your cryptocurrencies.
In any case, distributed ledger technology and the blockchain are among the safest and most powerful breakthroughs ever developed. Blockchain provides an amazing number of use cases, many of which are still in the planning stages.
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