If you are having sleepless nights thinking about whether or not to buy cryptos, you are not alone. While everyone is keen to know more about Bitcoin investments, they are still worried about how far secure it is. Bitcoin has been around since 2009, but it was only recently that the pandemic-induced financial crisis triggered a whole lot of attention to crypto investments.
Over the past decade, Bitcoin has gone through many ups and downs but the network stayed resilient. Moreover, the blockchain technology on which it had been founded now finds application beyond the Bitcoin. It is steadily permeating into various industries like healthcare, insurance, music, and fintech. So, to understand how secure the Bitcoin blockchain is, you need to know how the blockchain works in the first place.
What is the Blockchain?
The blockchain has been associated with cryptos like Bitcoin, Litecoin, Ethereum, etc. It is the technology facilitating digital transactions and keeps records of all transfers just like any standard database. However, unlike other databases, this technology has been used for storing all kinds of records, whether it is medical, financial, health-related, etc. The blockchain is a shared public ledger, one that can be viewed by everyone. All information about transactions is verified, validated, secured in blocks, and time-stamped.
How Safe is the Blockchain?
- Every block in the blockchain stores data and has a unique hash which connects this to the earlier block. So, every block is important and cannot be erased or changed. If a change happens for some reason, the hash number will change too and the block becomes invalid.
- All blockchain transactions will be secured through cryptography. There is a unique private key which is verifiable with the public key. When there is any change in data in a block, this unique private key becomes invalid. So, the block is automatically discarded from the blockchain.
- The blockchain is secure because it is decentralized and there is no one point of failure. So, it cannot be corrupted. When hackers attempt to hack into the network, they can affect one, but not all parts.
- All transactions are verified through consensus. Most consensus models will run on protocols like proof of authority, proof of work, proof of stake, etc.
The blockchain uses a distributed ledger which is run through a network of thousands of computers/nodes all over the world. These independent computers track and coordinate transfers. This is why the blockchain is different from any conventional money-transfer model where there is a single exchange for clearing transactions. The data on a block can never be erased or changed. Participants can confirm their transactions by referring to the blockchain. There is, therefore, no need for third party intervention.
Is your Crypto Safe?
Crypto system makes transactions immutable once blocks are formed. This means people cannot reverse transactions that have once been verified. You must understand that while the Bitcoin blockchain can be “public”, it is not unsafe. All transactions can be viewed but the identity of parties remains confidential. Hacking is practically impossible because it demands a huge amount of energy that is hard to get.
The blockchain is decentralized; this means that nodes all over the globe can track transactions. So, in case anything is amiss, nodes will detect it. While hacking is not feasible, it is not theoretically impossible. But chances are that your cryptos will stay safe in the Bitcoin blockchain. If you suffer losses, it is probably because of poor investment decisions rather than hacking or stealing.