Bitcoin has always been one of the more volatile topics of discussion. That is partly because of a lack of understanding of how it operates, its benefits, weaknesses and how to overcome them. Even so, it is impossible to quell everyone’s doubts when it comes to cryptocurrency, and especially Bitcoin.
One of the most controversial points of focus for Bitcoin is its security. Overall, the majority of people agree that Bitcoin offers significant protection and privacy. Unfortunately, due to the solidity of its security, there are those who claim that the protection provided is absolute – a statement that is very misleading. In truth, even Bitcoin has its shortcomings when it comes to security. Through this article, we have explored the ins and outs of Bitcoin security.
Although the blockchain is said to be hack-proof, the same cannot be said for user accounts. To use Bitcoin, you need an account, and for that, you need to register for a Bitcoin wallet. Each wallet is tied to a Bitcoin address, which is what is used to identify an account. This is a potential vulnerability.
Additionally, every Bitcoin wallet has a private key, which is used to access the wallet. Without the private key, it would be impossible to access one’s account. That is why hackers often tend to target the account holder. If a hacker takes over your private key, then you lose your account and your Bitcoin. This is why the wallet and private key are considered to be Bitcoin’s most significant weaknesses. So, what steps can one take to overcome such shortcomings?
Solutions to Bitcoin’s security shortcomings
Cybersecurity lies at the root of the problem and can very well be the best solution. Although Bitcoin is said to be anonymous, it is still possible to trace a Bitcoin address back to you. The easiest way is by taking advantage of one’s IP address and using it to identify the device and location of the owner.
However, with that in mind, you can use a VPN to hide your IP address, assign a different IP address to your devices and encrypt your network traffic. To increase the effect of the VPN even further, you should use Tor over VPN, which reinforces the privacy, security, and anonymity afforded by both Tor and VPN.
Besides that, you should install an antivirus to scan your device and eliminate malware. Malware can be used by hackers to gather or manipulate information on your device. For instance, keyloggers can be used to track and record your keystrokes, thereby gathering information about your private key.
Protect your private key
Hackers often target your private key, so protecting your key already mitigates security risks significantly. Ideally, you should store the private key in an encrypted digital folder from where you can use the convenience of copy and paste. Doing so allows you the convenience of not having to type in the characters, which reduces the risk of theft of your private key through keyloggers.
Obscure your transactions
From a logical standpoint, if a hacker doesn’t have your address, then they can’t put in the effort to steal your private key. Unfortunately, hackers use numerous means to gather Bitcoin addresses such as stealing information from trade websites. That is why it is essential to obscure your transactions. There are various ways to hide your Bitcoin transactions, and the choice ultimately depends on your circumstances. For instance, you could use an online wallet, which doesn’t assign an address to every user. In case you already have an address, then you could exchange your Bitcoin with someone you trust and use your traded funds for your transactions, although this lowers the security.
Additionally, you might consider Altcoin and Coinjoin. The former provides a way to exchange your Bitcoin for Fiat currency securely, while the latter allows you to join hands with multiple other Bitcoin users and pull your resources together for your transactions. By pooling your resources together with various parties, a hacker cannot tell one transaction from the other.
Bitcoin provides users with a numerous security advantage. However, you shouldn’t assume that there are no weaknesses in Bitcoin security. Nevertheless, with a clear understanding of these shortcomings, it is easy to prepare effective countermeasures. With the countermeasures in place, Bitcoin becomes one of the most secure financial options available.
– Jeff Anderson