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Can Bitcoin Be Hacked?

Bitcoin and other cryptocurrencies have attracted millions of users and investors worldwide. Bitcoin mainly attracts many people as it has a high chance of making significant profits. However, the growing interest in Bitcoin has also attracted hackers. Knowing that Bitcoin is a valuable digital asset makes hackers want to steal it from you.

Knowing how someone can steal your Bitcoin is essential. It will make you more proactive in ensuring that you take all preventive measures possible. For example, you don’t have to announce to everyone that you have Bitcoin. If hackers don’t know that you have Bitcoin, they won’t target you.

Before explaining why someone can hack your Bitcoin wallet, let me introduce you to the world of Bitcoin trading. With the eToro trading system app, you can start trading Bitcoin today. Just sign up for free crypto exchange account and start buying and selling. 

KEY TAKEAWAYS

  • Cryptocurrency is a decentralized digital currency that uses cryptography to secure transactions and ownership information.
  • Cryptocurrency transactions are recorded in a digital ledger called a blockchain.
  • The concepts behind blockchain technology make it nearly impossible to hack into a blockchain. However, there are weaknesses outside of the blockchain that create opportunities for thieves.
  • Hackers can gain access to cryptocurrency owners’ cryptocurrency wallets and exchange accounts to steal crypto. 

Why can Bitcoin be considered “hack-proof”?

Bitcoin is considered hack-proof because the Bitcoin blockchain is constantly reviewed by the entire network. Thus, attacks on the blockchain itself are very unlikely. To add a new block containing a collection of transactions, each participant (miner) who updates Bitcoin’s ledger is continuously solving complex math problems. 

These complex math problems are created by the cryptographic hash function of Bitcoin. If a specific block is added to the database, every node in the network has to agree on the validity of said block. Only if all nodes agree, is the Bitcoin ledger then updated accordingly. 

To manipulate a cryptocurrency network is extremely difficult. Erasing or overwriting a block of already spent Bitcoin, known as “double spending”, is rendered impossible by the decentralised, chronological and computing, power-intensive characteristics of the Bitcoin blockchain.   

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What is a 51% attack?

A 51% attack is quite possibly the most significant threat to blockchains. Such a scenario would look like this: If a single individual or organisation were to succeed in taking control of the majority of the networks mining power (hashrate), the transaction history of the Bitcoin network could, in theory, be changed and overwritten.

In order to decide which transactions to allow and which to reject, a majority (i.e., 51%) is always needed. To enable double spending (the execution of the same transaction more than once), a majority of 51% might theoretically change a blockchain’s distributed ledger. However, achieving this circumstance is very challenging and unlikely to occur. 

How Does Someone Hack a Bitcoin Wallet?

Just like how you keep your money in a bank account, you keep your Bitcoin in a Bitcoin wallet. You can have a hot or a cold Bitcoin wallet. A hot Bitcoin wallet connects to the internet, unlike a cold wallet, which makes it more susceptible to hacking. Someone can hack your Bitcoin wallet in several ways.

Phishing Attacks

Somebody can hack your Bitcoin wallet through a phishing attack. Phishing attacks use cloned websites to hoodwink users into sharing their login details. Hackers can create fake cryptocurrency websites that resemble legitimate websites. As a user, when you go to these cloned websites and log in, the hackers get your login details.

With your login details, the hackers can then use these details to access your Bitcoin wallet through a legitimate cryptocurrency website. With access to your Bitcoin wallet, they can transfer your Bitcoin to themselves. Before you realize it, you could have already lost most of your Bitcoin to hackers.

Malware

Hackers can use malware to target your Bitcoin wallet. And this happens when hackers send malware links to unsuspecting people. When you click on the links, your computer gets infected. With the virus installed on your computer to access your Bitcoin wallet, you are letting hackers access your information.

With such malicious malware, hackers can then send Bitcoin from your Bitcoin wallet to addresses that they control. Malware attacks can also affect cryptocurrency exchanges by targeting employees. And this can compromise the safety and security of the crypto exchanges and allow hackers to access users’ Bitcoin wallets.

Fake Hardware Wallets

By using fake hardware wallets, someone can hack your bitcoin wallet. And for individuals who store their Bitcoin in hardware wallets, this is primarily the case. The plan is to deceive you into switching to a compromised hardware wallet instead of your original. Hackers will notify you that you need to update your old hardware wallet and will send you the compromised hardware wallet.

If you fall for it, the hackers will get your Bitcoin wallet recovery key when you plug the device into a computer and key in the information. The device captures the key and sends it to the hackers. With your keys, they can unlock your Bitcoin wallet on the blockchain and siphon your Bitcoin. 

How To Protect Your Bitcoin Wallet?

Now that you know how somebody can hack your Bitcoin wallet, you should take specific measures to prevent it from happening. You can use a cold wallet instead of a hot wallet. And this is more secure because it is not on the internet. Also, be very vigilant when accessing and opening your Bitcoin wallet. Confirm that you are on the legitimate website and don’t click on suspicious links. 

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