BTC Guides: Is Bitcoin Safe?
A majority of the world's population believes bitcoin to be this vector for scamming, laundering, terrorism, and other unsavoury acts. However, this is far from the truth. Most of these claims are completely misleading and false. A team of expert programmers is maintaining and improving the crypto network every day.
A majority of the services that they provide are completely free and done in their free time. This major project is open-source and community-driven, all for financial inclusion and personal freedom. However, it's not perfect. But with each day, it's getting better.
If you're wondering, "Is bitcoin safe to use?" the answer is yes. But only if you manage the security of your cryptos well.
Is Buying and Using Bitcoin Safe?
With over a decade of history, many promote BTC as a reliable instrument when used and secured correctly. With its ability to store value, enable borderless P2P currency transfers, and accessibility, it's no wonder that many are attracted to this digital currency.
Bitcoin's safety protocol is very sturdy, and it can withhold a majority of cyber attacks. The bad press that BTC gets from hacking stems from third-party services. From exchanges, wallet providers, and even mismanagement of a private key, the root cause of cyber breaches is not because of bitcoin's security itself.
As with any regular currency, bitcoin casino also has a few issues that potential users need to know about. It includes the volatility of its price, the security of wallets, sub-par third-party service providers, and threats in cybersecurity.
However, it's only fair that we raise the question of a traditional currency's safety. Aren't most conventional financial tools also a front for money laundering and many other illicit activities? And all of these are being conducted using regular money.
These traditional financial systems are prone to crises and economic bubbles, and money backed by governments tend to lose value over time.
A Few Things You Need To Know About Bitcoin Safety
Transactions Are Irreversible
Bitcoin transactions are irreversible. The only who was the power to refund it is the user who's on the receiving end. It means that you need to make transactions with establishments and users that you trust completely, preferably those who already have a good reputation.
For businesses and individuals receiving the bitcoin, they need to do their part and keep track of every payment request with their customers. The BTC system can detect typos and won't let a user send money with the wrong address. However, it's always better to have extra measures in place to improve safety and avoid errors.
Who knows, maybe there will be services in the coming years that will provide more protection and choice for both the consumer and business. Given the current trends of cybersecurity, this assumption isn't far off.
Bitcoin Is Not Completely Anonymous
You've probably heard about bitcoin's famed "anonymity." Sadly, this is just the party true. Every user has the power to track a specific wallet and their contents within the network, but there's no way of knowing who the owner of the wallet is. Bitcoin transactions and wallets don't require any private data or identification. However, there are other methods of finding the identity of a user. For instance, you might have to impart personal information whenever you register on cryptocurrency exchanges. Therefore, every transaction done in that exchange can potentially lead to a breach of privacy.
You can find plenty of BTC wallets that have extra privacy features that offer added anonymity and safety for their users. You might want to look into Monero, Zcash, and Dash if you want these kinds of wallets.
As you may have realized, it takes extra effort to ensure the privacy of your bitcoin transactions. Every bitcoin transaction is store both permanently and privately in the blockchain. It means that every user within the network can see transactions and balances of every bitcoin address. It is the main reason why an address should only have a single-use.
Hacking Prevalence
A hacker can be a potential risk when they have their eyes on cryptocurrency exchanges because most aren't being regulated. The bitcoin network is pretty safe, though. Only a potent computer can breach it, and it will take many years before such a computer is created.
Another risk related to bitcoin is that it's challenging to manage. One of the most popular theories regarding hacking is the 51% BTC blockchain attack. It could theoretically happen if a collective pool of crypto miners are controlling at least 51% of the total hashing power that runs the bitcoin blockchain. And they can potentially have the power to undo recent transactions.
What's even scarier is that this theory came close to coming true in 2014. Ghashi.io, an accessible mining pool, almost obtained 51% of the bitcoin network. Fortunately, a few members of this pool left voluntarily, resulting in a decrease in influence and shares.
A majority of bitcoin experts that the 51% attack is highly unlikely because its cost would far outweigh any potential benefits. And 99% of blockchain users won't be harmed by this attack. It also can't be used to change old transactions or steal BTC. It can only affect recent transactions, and the network's efficiency will be disrupted momentarily.
Bitcoin Is In An Experimental Stage
The Bitcoin currency is relatively new if you compare it to conventional currencies. Because of this, it's still constantly improved through active development. And many people are now starting to see bitcoin's potential. However, this rapid adoption has revealed new challenges.
Due to the influx of new users, you will most likely encounter higher fees, slower transactions, and possibly worse issues. Be always prepared for any potential problem and consult with experts before you make a major investment. With that said, even the most reliable advice can be wrong because of bitcoin's unpredictability.
Taxes and Regulations
BTC isn't regarded as an official currency. However, this doesn't exempt you from paying income, payroll, capital gains, and income taxes for everything with value, and this includes bitcoin. You're responsible for adhering to any legal and regulatory mandates prescribed by the government or municipalities you are in.
Price Volatility
Is bitcoin a safe investment, then? If you're studying the trends, you'll see that bitcoin prices rise and fall quickly for short periods. It is mostly because of its unusual nature, growing economy, and occasionally illiquid markets. Therefore, it's not a smart choice to pool all of your savings into BTC. You should look at every cryptocurrency as a high-risk type of asset.
How To Secure Your Bitcoin?
Much like real life, you must secure your wallet from potential theft. Because of bitcoin, it's now possible to transfer a lot of value quickly and conveniently, allowing for better control over your resources. But the price you're paying is the potential threat in security.
How secure is bitcoin entirely depends on how much effort you spend on ramping up your safety nets.
Here are a few steps you can take to improve your current security practices and the safest way to store bitcoin.
Securing Your Wallet
- Make a backup of your wallet
The first thing you can do to make your bitcoin safe is to create a wallet backup. This way, you're protected from any computer malfunctions and human errors. It also allows for an easy recovery if one of your devices was stolen. - Encrypt every backup
All backups that you store online can be vulnerable to hacking. Even your devices with internet connection capabilities are prone to be attacked by malicious software. Therefore, it's a good practice to keep your bitcoin safe by encrypting all of your backups, exposed to the internet. - Secure each one of your backup locations
One point of failure can lead to your downfall. If you have a backup that's not limited to one location, then each one of those should be made secure. That way, any unfortunate event won't stop you from recovering your wallet. Opting for different forms of media like papers, USB keys, and CDs is also a good idea. - Update your backups
Do this habitually to ensure that all of your newest bitcoin changes in address and every new address will be included in your existing backups. You should, however, take note that every application will soon use wallets with the capability to update automatically. - Encrypt your digital wallet
Aside from your backups, you should also encrypt your digital wallet. This way, you can set a unique password that can prevent most thieving attacks. However, this doesn't protect your wallet against any keylogging software and hardware. - Strengthen your passwords
Using a password containing only letters and recognizable words will only make it easier to break into. A right password should have a mix of numbers, punctuation marks, letters, and they should be as long as possible.
A select few programs are designed to create secure passwords, so you could opt for using them instead. Regardless, a password that's tough to crack is also hard to remember, so take heed when memorizing it. - Remember your passwords
Always remember your password. Otherwise, you will permanently lose all of your BTC funds. Unlike traditional banks, you don't have much in terms of password recovery for bitcoin wallets. When in doubt, opting for a physical copy of your password that's hidden in a secure location can provide a bit of security.
Transactions
How safe is bitcoin when it comes to exchanging or spending? It mostly depends on how reliability and trustworthiness of your service providers. If you become a victim of bank fraud, there are regulations and laws in place that will help recover with the losses. With bitcoin safety, though, it's a bit different. No laws are currently in place that offers protection for bitcoin fraud.
You should also remember that bitcoins are completely non-repudiable. After paying for it, the money you spent is gone. Making a mistake like inputting the wrong address or amount can be costly. And you're left at the mercy of the receiver.
The Latest News Regarding Bitcoin Safety
Several crypto advocates are arguing that bitcoin is a potential investor safe when traditional markets become rocky. Unlike regular currencies, bitcoin is free from the influence of national economies or governments. It also has a supply cap, so BTC can be related to precious metals that are finite, like gold or silver, meaning that it will increase in value over time as long as the demand stays high.
However, not too long ago, many are seeing the volatility of bitcoin firsthand. And it might not be a viable "haven" after all. Bitcoin recently tumbled down to 15%. So far, this is the worst experience five-day slide ever since November. Many other cryptocurrencies have had better luck, but not by much. One Bloomberg index has tracked that other more significant cryptocurrencies, along with bitcoin were downed an average of 12%.
People have assumed that BTC and other cryptocurrencies will become the main attraction for safety trade. However, the recent dips are very worrying, and cryptocurrencies are starting to lose a bit of the luster of a "safer asset."
Afterword
While the trends of BTC are becoming rocky, its usage remains as high as ever. If you want to keep your bitcoin safe, it will take a lot of time and effort, but overall worth the hassle. It is especially true if you have accumulated a large amount.
Always use wallets that are safe and secure, and you should be more nitpicky when it comes to making transactions with bitcoin. By taking these extra measures, you stand a lower chance of being a victim of cybercrime.
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