Is Bitcoin Unhackable?
Early in Bitcoin's life, the news about it was sparse and usually written by people who did not know the system history. Everything was new, and all the concepts about the Bitcoin and other software that used Bitcoin and the blockchain were mingled. Thus, both proclaimed successes and the alleged failures were often exaggerated reports of events.
This exaggeration is also present in the report that Bitcoin has been hacked in the past. One of the most famous cases of Bitcoin-related hacking is the theft of thousands of Bitcoins of an Exchange called Mt. Gox.
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The Mt. Gox case
An Exchange is where you can buy and sell Bitcoins, converting them into fiat currency. Mt. Gox was the first Bitcoin Exchange with large volume operations. It began its operations in 2011. While in operation, it accounted for over 70% of all conversions of Bitcoin in a given period. Its success increased media coverage on Bitcoin. Also boosted the creation of new exchanges and the multiplication of applications using the Bitcoin technology.
But, in early 2014 Mt. Gox got closed, claiming it had suffered a theft of 650,000 Bitcoins that were in its possession. This theft was promptly investigated by the authorities. The Bitcoins lost in this episode were worth approximately $ 450 million at the time. With the investigation progress, several security holes were discovered in the software created by the Exchange to manage the buy and sell transactions. From these failures, the Bitcoins were redistributed through the network in a process that began slowly in 2011.
Possible security flaws
The exchanges create their own software to control the buy and sell process, and to send Bitcoins from one user to another, as well as from the Exchange to the Bitcoin network. In this software type, there is a great possibility of some hacker find a flaw he can explore. Thus, when using this type of service, it is highly recommended to use an Exchange that is well-known. It's also a good practice not to leave your money for too long in the wallet associated with the Exchange to minimize the risk.
Bitcoin network security and Bitcoin wallets
The Bitcoin transaction processing network validates information about the existing balance in the two accounts involved in the transaction. If there is not enough money, this transaction is not completed. But the network does not check who is accessing this account, as this software (the bitcoin wallet) is not part of it.
Each wallet is created by a different software manufacturer. The security protocol in that software that ensures no one can access your Bitcoin wallet. Always use the official wallets available from well-known companies in the Bitcoin market. These wallets have been extensively tested and had its code verified by several independent programmers.
Currently, there are several wallets and exchanges reliable in the Bitcoin world. By using them, you have pretty much the same security level as if you were using the banking system or traditional credit cards.
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