When planning to invest in Bitcoins, the first question that comes to one’s mind is whether Bitcoins are actually safe. Bitcoin technology is considered to be safe because it is founded on a secure technology, the blockchain technology. Bitcoins are secured by encryption; they are decentralized, public and trustless. However, as any other investment, Bitcoins have inherent risks. Prices are highly volatile and unpredictable.
Can you Consider Bitcoins to be Safe?
- As compared to other financial systems, Bitcoins are based upon the blockchain which is far more advanced as it relies on cryptography. Transactions are verified by a network of computers/miners/nodes that must validate these. This explains why transactions once recorded cannot be reversed, changed, or erased. So, in terms of data security, Bitcoin is safe.
- Bitcoin is based on the blockchain which is a transparent ledger viewable by everyone. This is why it is very hard to cheat the system. Since data is publicly available for all to see, it is impossible to hack into the system secretly. When compared to the regular data breaches faced by companies, incidents of hacks and breaches in Bitcoin have been far less.
- Unlike fiat currencies, Bitcoin is decentralized because transactions are verified by nodes spread all over the globe. This means that if anything goes wrong in any node, others will instantly detect a problem. It also stops hacking because stealing of data will be prevented by other nodes, unless you have more than 51% control over the entire network, which in itself is an impossible task.
- Finally, Bitcoins are safe because they do not need permission. As there is no regulatory authority issuing or controlling Bitcoins it is open for one and all. The lack of permissions is what makes Bitcoin fair.
How can you Secure your Bitcoin Wallet?
Digital currencies can only be compromised through exchanges or wallets where these are stored. The Bitcoin wallet will not directly contain your coins; rather it has the private keys which give you access to your funds. Then you can trade Bitcoins online. Anyone getting his hands on the private key can steal your money. Cyber criminals make use of sophisticated hacking methods to steal funds from digital wallets unless you are cautious. What can you do to secure your wallets?
- To start with, offline storage is a safer option. This is a cold wallet that is not linked to the Internet. So, it is protected against hacks and cyber threats.
- Using a secure web connection is necessary if you wish to keep your money safe in the wallet. Public Wi-Fi networks are best avoided. Even when you access the home network, you should ideally use VPN to be extra careful. The VPN can effectively change your IP address, keeping browsing secure and free from threats.
- Maintaining more than one wallet is a good way to secure your Bitcoins. There is no limit to how many wallets you can hold. So, you could choose one for day-to-day transactions and keep the rest in another wallet.
- It is also important to keep your own devices completely secure from virus and other cyber threats. This means updating them constantly and getting the latest software to protect against new vulnerabilities.
- Changing the password on a regular basis is needed to keep your account safe. The password should be different for different devices and contain complex characters and letters. Two-factor authentication is highly recommended for extra coverage.