People continue to ask a lot of questions about Bitcoin. And one of the leading questions has always been about the safety of Bitcoin investment. This specific question is not because of the volatile nature of the Bitcoin market. Rather, it is because most are worried about the security of the digital currency. You can check the TOP Online Brokers to learn more about bitcoin trading.
Bitcoin ushered many investors into the world of cryptocurrency and has been around since its launch in 2009. Since then, the Bitcoin network has demonstrated to be powerful and resilient in safeguarding crucial information and data.
But one cannot discuss Bitcoin and not talk about blockchain technology. Blockchain technology drives the virtual currency (Bitcoin) and it is recognized for its exceptional security. Its remarkable security and data storage integrity is the major reason for the rapid adoption of blockchain technology. Today, Bitcoin is the biggest success story of blockchain technology as general adoption of Bitcoin and blockchain technology continues to grow.
Blockchain technology: how does it work?
The simplest way to understand blockchain technology is to view it as a series of blocks that store data. Each block has a unique number and a link that connects each block to the previous block forming a sequence. All transactions, data, records are stored on these blocks which are open to the public and time-stamped.
Blockchain is often linked with various digital coins like Bitcoin, Litecoin, Ethereum, and so on serving as a platform for cryptocurrency transactions. Simply put, it serves as a database for all crypto transactions globally. However, this technology has also been used to store various types of data such as medical data, financial data, humanitarian aid data, and more.
Bitcoin Security and Safety
Bitcoin is mostly safe because it’s established on one of the most secured technologies: the blockchain technology. Blockchain technology safely secures Bitcoin, thanks to the invariability of blockchain blocks as well other unique features. These features include;
- Cryptography
All transactions on the blockchain network are secured by cryptography. Each block essentially has a distinct and private key that can be validated with a public key. If any change should occur in transaction-related data, the block’s private key becomes invalid and the block is removed from the chain.
What this implies is that the cryptographic system renders transactions irreversible. In simple terms, once a block is created it cannot be modified. But, information can always be added to the block. This prevents people from being able to reverse any transaction on the blockchain network.
- Decentralization
The decentralized and distributed nature of blockchain technology also makes it highly secure. Blockchain technology has no single point of failure which makes hacking very difficult. Corrupting a part of the blockchain will not affect another part of the system.
In general, the Bitcoin network is distributed having thousands of nodes all over the network system. These nodes that keep track and monitor all transactions going on within the system. The nodes ensure that if something goes wrong on one server, others can quickly pick up the slack. This makes hacking into any of the servers pointless
However, as regards private blockchain, this benefit is partly lost since they use a single point of control and a restricted number of nodes. This limits the users from making modifications to the ledger. A lot of firms make use of private blockchains for internal use as it enables them to manage their processes.
- Consensus
Blockchain technology operates via a consensus model. The consensus model validates that a transaction has occurred and legitimized such a transaction. A lot of consensus models operate on protocols that involve proof of stake, proof of work, proof of authority, and so on.
- Public
The Bitcoin blockchain operates on a public ledger. While the words public and transparency don’t sound safe, it is in the case of Bitcoin. Even though user anonymity is guaranteed, all transactions on the Bitcoin network are available to the public which makes it difficult to cheat the system.
Bottom Line
Blockchain technology offers Bitcoin the highest level of security one can get for their financial assets in this present time. This is not to say that Blockchain technology is impossible to hack or is foolproof, but hacking the blockchain will be a rigorous task.
With Bitcoin, you’re more liable to suffer financial loss from bad investment than to have it hacked from you.
