If you’re about to spend some of your hard earned money on Bitcoin, it’s natural to be concerned about security and to worry about the safety of your cryptocurrency. As Bitcoin is entirely digital and not controlled by any central authority, one of the biggest concerns for many people is how vulnerable it is to hackers.
Some sources sell Bitcoin as 100% safe, but that’s not the truth. It’s important to know the risks (and how to protect yourself) before investing in Bitcoin. Here are some guidelines.
Can Bitcoin be hacked?
The answer is no. Bitcoin itself has never been hacked and it seems wildly improbable that it ever will as changes must be approved by other users.
However, that doesn’t mean hackers cannot steal Bitcoins – they just use another route. Hackers can (and have) exploited flaws in the security of cryptocurrency exchanges, wallets and even mining operations. The weak link is not the blockchain technology – its the people using it. Many hacks are the result of Bitcoin users failing to protect themselves, or not taking appropriate care.
Bitcoin is still relatively new. As with any new technology, some people view it as a zero-sum game and assume they can only gain anything by ensuring others lose out. While it may sound counterintuitive, each time a major exchange gets hacked, it makes things safer for everyone in the long run as developers work to update and improve their security. With time, better safeguards are developing.
How to protect your Bitcoins
Once a transaction is processed, it cannot be reversed in the same way that a direct debit or Paypal payment can.
For this reason, if you own Bitcoin, it is vital to take the necessary steps to keep your wallet secure. The rules are very different to the ones we use to protect cash. Here are some guidelines.
- Use strong passwords for exchanges – and ensure only you can input it. That means not saving it in password managers or autofill. The Winklevoss twins (owners of around £1 billion worth of Bitcoin) even decided to print out the private key to their account, cut it up and store the pieces in several different lockboxes.
- Turn on 2-factor verification for email and phone. If someone tries to access your account, they’ll need access to both.
- Be cautious about sharing your details. A common technique is phone porting, which can occur when someone who owns cryptocurrency shares their phone number online. Another person can then call up their phone provider and ask to switch the number to a different device. If successful, this may enable them to access the victim’s Bitcoins. You might want to consider calling your phone provider and discussing the safeguards they offer, such as a passcode for changes to your account.
- Only use reliable exchanges, wallets and other technology. If a company has been around a while, is used by a good number of people and doesn’t have a history of major security breaches, it’s probably a good choice.
- Be careful when making transactions. Some sites, such as online casinos, accept Bitcoin as payment but lack sufficient security controls.
- If you want to be extra cautious, avoid discussing your cryptocurrency holdings on social media accounts that include identifying information. For example, if you want to set up an account on a forum and discuss Bitcoin, use a different email address.
- Consider keeping your Bitcoins in more than one wallet, using different emails and passwords for each. This is especially important if you hold large amounts.
There is no such thing as a 100% safe method of storing any form of currency. But with common sense and care, it’s possible to keep your Bitcoin safe from hackers.
For even more security advice, be sure to read the Wirex guide to 2-factor verification.