You’re reading this because you know that Bitcoin is a successful cryptocurrency. Over the recent years, Bitcoin prices have increased and dropped dramatically.
Price volatility is a significant challenge that all cryptocurrencies face today. That’s because digital currencies are navigating a tricky ecosystem.
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But digital currencies face other security risks and concerns. These include digital wallet safety, double-spending, and increasing vulnerability due to Bitcoin exchanges’ attacks.
There are also fears of unscrupulous miners that engage in selfish mining.
All these concerns might be destructive towards the acceptability and adoption of this cryptocurrency. Here is a breakdown of the significant Bitcoin risks and problems:
Bitcoin Wallets Vulnerability
Bitcoin wallets face real vulnerability because of theft and hacking attacks.
Some experts have reported weak spots in the Bitcoin wallet hardware that hackers can exploit. What’s more, even hardware wallets with heavy encryption are vulnerable to hackers because of this loophole.
Ideally, hackers can use malware to intercept communications between personal computers and wallets.
And this security breach can affect Bitcoin user’s privacy. That’s because hackers can easily divert their funds to different accounts.
Cyber-Attacks and Hacking
A potential crippling attack at a Bitcoin exchange is possible.
Recently, Bitcoin users have reported significant attacks on crypto exchanges.
Although Bitcoin’s price has constantly been fluctuating, people still fear that attacks on cryptocurrency exchanges could cripple this popular digital currency. An attack on a crypto exchange is not about the blockchain.
Some experts have indicated that hackers have tried to penetrate the blockchain. The good thing is that nobody has hacked the Bitcoin network so far.
However, this doesn’t mean that the Bitcoin network is impossible to hack.
The increasing attack on Bitcoin exchanges means you should choose a reputable platform when trading this cryptocurrency. Popular platforms like Bitcoin champion have security measures to ensure the safety of users’ information and funds.
Ideally, investigate a cryptocurrency exchange before you register and use it to purchase and sell Bitcoin.
Distributed Denial of Service attacks also threatens Bitcoin. And cryptocurrency exchanges are a favourite for DDoS attacks. That’s because the frequency of the attacks is increasing. Therefore, research the measures that a platform has in place before using it to trade Bitcoin.
Double Spending
Double spending is a transaction risk related to Bitcoin. And some measures can mitigate this concern, though fears linger. This cryptocurrency is getting sturdier against double-spends.
But some individuals can constitute attacks that may enable them to use one coin twice in a transaction. For example, Bob can buy an item from Alice and send her x bitcoins. Bob can also complete a similar transfer to a different address that he controls with the same x bitcoins.
Alice might believe that Bob sent the funds and, therefore, not mind confirming. However, the funds could be credited to Bob’s address, while Alice gets nothing.
Bitcoin transaction’s irreversibility means that Alice won’t get the money because there is no way to invalidate the transaction.
Selfish Mining
The continued proof-of-work consensus use by Bitcoin is also an underlying threat.
Some Bitcoin mining pools are getting powerful by the day to command serious mining ratios. And these can engage in what some people call selfish mining.
This concept is also known as block withholding. It entails using computational power by a pool to mine a Bitcoin block and hide it from the other miners rather than broadcast it to the crypto network.
With the other block groping in the dark, the selfish pool can mine a second one. If the greedy miners find another block first, broadcasting two blocks at once creates the longest forked chain. Thus, the selfish miners beat the others to get all the rewards.
If selfish miners combine such conspiracies with the Sybil attack, they can harm the mining process considerably. That’s because the greedy miners may attempt to use their strength to invalidate the network’s transactions.
Final Thoughts
There are several security risks and concerns facing Bitcoin.
However, these risks and considerations are about Bitcoin use rather than the blockchain network.
Therefore, experts can remedy most of these risks and concerns to prevent the exacerbating of the problems.
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