If you are joining the renegade investors in digital currencies like bitcoin, learn how to protect your investment from a hack.
According to CSO Online, bitcoin is inherently safe because of the technology used to operate it. Bitcoins are protected by a private key of a public bitcoin wallet address. These private keys are said to be impossible to crack. In addition, each miner on the bitcoin network has access to the entire contents of the block chain, and it can be used to verify the value of any address and follow any transaction.
While direct attacks are said to be unlikely if not impossible, much of the vulnerability of bitcoin revolves around how the bitcoin owner handles their wallet, according to Fortune.
Many bitcoin investors are not miners (people who use fast computers to digitally detect unassigned bitcoins) but rather have purchased through an online vendor such as Coinbase. These services are incredibly accessible and transform the experience of owning bitcoin into something more like an internet stockbroker. The price for this convenience, however, is that the bitcoin owner is at the mercy of the service provider's security system rather than the network itself.
Even if a person keeps their wallet address and private key protected on their own personal computer or storage device, it is still possible for a thief to gain access to it in the same way they would any other bit of personal data – through email scams and malware. Whether the user clicks a link to a malicious website or installs a downloaded virus, once the attacker has access to a computer, they could find any stored keys quite easily.
Scammers also create what is known as an ICO, initial coin offering, with a fake bitcoin that lures potential investors into trading real bitcoin for a product with no value. They could also create an exchange or other marketplaces that require users to deposit bitcoin into one of their own wallets to use the service. Once they have the money, the thieves can simply shut down their service and disappear with the bitcoin in hand.