What you'll learn 👉
Table Of Contents
An unknown creator, stories of million dollar hacks, and scam ICOs all may have you wondering, “Is it safe to invest in Bitcoin?”
Bitcoin is actually more secure than most other financial systems even with the negative stories of tragedies that seem to flood the news at times.
Two main things seem to happen: either people lose the all-important private keys that unlock their bitcoin addresses, or they get hacked.
One of the biggest stories about lost Bitcoins happened in summer 2013. James Howells threw an old hard drive into the garbage, which contained a digital wallet holding 7,500 Bitcoins.
They were worth almost nothing when he purchased them in 2009. However, when he realized what he’d done, they were worth more than $4 million.
That’s why investing in a secure wallet and taking the time to learn about how Bitcoin works is essential in keeping your Bitcoins safe.
Satoshi Nakamoto, the unknown person or persons who designed Bitcoin back in 2009, built the network with certain measures to ensure its safety.
There are over ten thousand of nodes (computers) around the world that keep track of the Bitcoin ledger and validate transactions on the network. This is drastically different than the storage of data on centralized servers used in traditional finance, and when we look at the recent Equifax hack, it’s clear why storing private information on a centralized server is a huge risk.
Bitcoin uses a decentralized system as a preventative measure, which means that there’s not one single point of failure that a hacker could exploit to compromise the network. For this to even be possible, they would have to find a way to control 51% of the network nodes.
Bitcoin is open source and the entire code base that runs the Bitcoin network is available for anyone to view and audit.
Countless developers have scrutinized the code for any loopholes, and as the code is updated, they continue to check it for mistakes.
Some people claim Bitcoin to be an elaborate scam. However, with the network open for review, that’s near impossible.
When making a Bitcoin transaction or using a Bitcoin wallet, you don’t need to attach any personal or confidential information.
You’re at less risk of identity theft because your personal information isn’t attached to your wallet or transactions. Even if someone gets hold of your wallet’s private key, they won’t have access to your personal information, they’ll only have access to your funds.
All transactions that are made using Bitcoin are public and irreversible, and there’s mathematically no way to fake transactions or make errors in recording account balances.
One more thing worth noting is that a transparent ledger of transactions also decreases the risk of money laundering and fraud.
The biggest threat to your Bitcoin investment is with the volatility of the price, and not with the network itself. However, the price should stabilize as more people begin to use Bitcoin and other blockchain technologies.
Like I said in the beginning, you should start by educating yourself, learn about the currency, what affects it, what are its advantages and disadvantages, because with proper education and correct storage practices to keep your Bitcoin safe, your funds are as secure as when using other financial channels (if not more secure).