Security is always a concern when it comes to money or anything that has a value. From this point of view, the bitcoin market is similar to the usual financial system. The more popular cryptocurrencies get, the more the security concerns arise as a lot is at stake. The big question is, can cryptocurrencies be hacked?
Cryptocurrencies CAN’T Be Hacked!
Cryptocurrencies like Bitcoin, Ethereum, and others can’t be hacked. These cryptocurrencies are tamper-proof. They are run on blockchain technology which is very secure. To hack a cryptocurrency, one needs to hack a blockchain and this is almost impossible.
Blockchain technology is distributed in nature and this contributes to its security. Blocks of all the transactions on the network are stored on computers spread across the globe. To successfully penetrate a blockchain network, one would have to seize more than half of the network in a scenario called a 51% attack.
A 51% attack requires a hacker to have control for over half the blockchain and this is highly unlikely. This explains why to date, there is no blockchain that has been hacked. This, therefore, concludes that the technology on which cryptocurrencies run is very secure. This, however, doesn’t make cryptocurrencies 100% secure.
Cryptocurrencies are not 100% Secure
It takes more than being a blockchain-based technology to make a cryptocurrency 100% secure. The cryptocurrencies on their own might be safe from hackers but user interfaces and the way users handle them make cryptocurrencies susceptible to attacks.
To access and transact using cryptocurrencies, one needs a user interface. These interfaces come in the form of online wallets where people store their tokens and authorize transactions. These wallets are programmed by individuals and they differ from one another depending on a type of crypto coins they are suitable for.
There are very many security risks inherent to cryptocurrency wallets. Different wallets have varying security levels. Some of the wallets have loopholes and unscrupulous individuals always find a way to infiltrate them and siphon away users’ coins.
Some of the most notable wallet hacks in the recent past include the Botham $30 Million Heist, the Coinrail $37.2 Million hack, and the infamous $195Million BitGrail saga. In all these sagas, hackers made their way into users’ wallets and transferred tokens worth millions of dollars to unknown destinations.
Since everyone needs a wallet to transact using cryptocurrencies, there is always a risk of a hack. It is, however, important to note that most wallets are generally safe and reports of hacks are far between. Users just need to choose reputable wallets and keep them safe from unauthorized access.
Cryptocurrency Exchanges Are Vulnerable As Well
Cryptocurrency exchanges are platforms where users trade tokens with other users. To trade on these platforms, you have to deposit your money to the exchange’s wallet. This further exposes your coins to more risks of hacks.
As an individual, you might do all you can to protect your wallet but once you deposit your funds onto an exchange, you no longer have the control over your coins. Your funds are always at a risk on an exchange, because such platforms are targeted by hackers.
In 2019 alone, hackers made away with over $4 Billion from Cryptocurrency hacks, and majority of this money was stolen from exchanges. Besides the money, more than half a million users’ login credentials were stolen from a number of exchanges as well.
Some of the notable exchange hacks include the Upbit Ethereum hack valued at $51 million, Coincheck’s $534 Million loss, and the Coinrail $37.2 million loss. All these high profile losses left many people questioning the security of major exchange platforms.
The other security challenge of crypto exchange platforms is their jurisdiction. There are no clear rules governing the operation of these platforms. In the event of a hack, it is not clear what the legal implications are. Since blockchain advocates for decentralization, forming a central governing body would be conflicting with the idea of decentralization.
How To Ensure You Are Safe From Hacks
Despite the worrisome numbers mentioned above, it is important to reiterate that cryptocurrencies are still very secure. As a user, you also have the chance of making your cryptocurrency transactions even more secure by doing the following.
Invest in Reputable Coins Only
There are a lot of cryptocurrencies cropping up every day. Some of them are legitimate while others are run by unscrupulous individuals looking to fleece you your money. Always invest in reputable cryptos with proper documentation.
Keep your Private Keys Secret
To secure your crypto wallets, ensure that you keep your private keys secure. Don’t share this information with anyone except someone you trust like your partner. Without a private key to your wallet, it is impossible for someone to access your wallet and siphon away funds stored on it.
Trade On Reputable Crypto Exchanges
Only trade on reputable exchanges. Before depositing money on any platform, always do a background check on the company. If there is any news or history of malpractice, that should be a red flag.
There are very many reputable exchange platforms that you can count on to keep your money safe.
Never Leave Your Coins on Exchanges For Too Long
Unless you are actively trading, never leave your money on an exchange for too long. Withdraw the money and keep it in your cold or hot wallet. This reduces the chances of losing your coins in the event if the exchange would be attacked by hackers.
Thanks to the architecture of the blockchain network, cryptocurrencies are very safe and can’t be hacked. This, however, does not mean that your funds are safe and you have to take extra measures to safeguard your funds. If you follow the provided guidelines – invest in reputable coins and trade on reputable exchanges, you can rest assured that your funds are safe.