Bitcoin is a digital currency launched in 2009, with the market capitalisation of over 42USD billion it has become the dominant currency in the world of digital currencies. Adoption and usage of cryptocurrencies these day, many people are begin to wonder how secure Bitcoin is?
Bitcoin is a cryptocurrency which mean that is based on cryptography to relieve anonymous transaction within the network. When it come to question what is making Bitcoin secure, the answer is blockchain and encryption.
Bitcoin is using SHA-256 encryption techniques for its Proof or work system and for the transaction verifications same.
The whole security of BItcoin is based on a blockchain system that contains blocks in which every transaction that have ever happen in the network are recorded in a chronological order. The blockchain is basically making the peer to peer system easier. It is a system in which there is no third side in transaction. The transaction is happening between two users and every transaction is verified by a network of nodes and after the verification the transaction is being recorded in a public distributed ledger - blockchain.
Storage Security - Wallets
Bitcoin are stored in wallet, unlike the typical bank account, Bitcoin wallets contain two keys. First is the public key that is used to receive the bitcoin in the correct wallet, it can be observed like some kind of address, the second one is the private key which is used to verify the ownership of the origin of the bitcoins that are transferred in the transaction. Online wallets are exposed to online risk, especially when someone else know your private key.
It is proven that is it possible to avoid the security and double spend the same Bitcoins. This could happen if someone is not waiting for transaction confirmation and the same bitcoins are spent twice, but this type of fraud is rare because the huge amount of computing power is needed to succeed.
To make a resume: Bitcoin is very secure, the insecure sides of this business are storage and exchanges, so Bitcoin owner must be clever when they are choosing them