Cryptocurrency can be really scary for newcomers. Join us as we cut through the noise and talk about digital asset security!
August 17, 2021 · 5 min read
Can Bitcoin be stolen?
There is a seemingly endless supply of stories regarding stolen Bitcoin and the risk of digital currencies. Mainstream Bitcoin news is oftentimes very bleak (unless it’s about the current bitcoin price). But negativity and sensationalism don’t tell the whole story.
It’s no secret, we’re big proponents of decentralized currencies. So we’re going to cut through the noise, and give you the facts. Can Bitcoin be hacked? Well, like all good answers, it depends. It’s necessary to define how we’re defining stolen.
The importance of this distinction is the same as distinguishing between having your wallet stolen with cash in it, or being given counterfeit banknotes. Having your wallet stolen is possible for both Bitcoin and fiat. However, the latter is not.
The term blockchain refers to the shared public ledger on which cryptocurrency networks rely. All transactions that are confirmed become a part of the blockchain. It allows a cryptocurrency wallet to calculate their ‘spendable balance’ so that new transactions can be verified thereby ensuring they're actually owned by the spender.
Conceptually it can be difficult to understand, but it’s as simple as a long spreadsheet that contains every transaction, from which, your wallet can calculate the amount of Bitcoin, or currency, you have access or ownership over.
Miners are responsible for carrying out the validation of this ledger. Through consensus, they reach the objective truth. When a transaction is submitted, it must be agreed upon by miners, before it can be added to the chain. Once added, that transaction is an immutable part of the ledger, and will be for the rest of Bitcoin’s existence. This work is governed by Bitcoin’s proof of work protocol, which has drawn plenty of criticism recently due to its energy consumption.
The Bitcoin blockchain remains incredibly secure. Through cryptography and the decentralized and distributed ledger, counterfeiting Bitcoin, or accessing other people's Bitcoin, for now, remains impossible (it is theoretically possible through quantum computing, but that threat is beyond the scope of this article, as it currently does not exist in that form).
Miners expend energy as they race to solve complex mathematical equations, or “Hashes”. The winner is rewarded with a block reward and adds a new block to the chain. This method of consensus is called ‘proof of work’.
This process of cryptographic verification means that for someone to ‘hack’ the Bitcoin ledger, they would need to alter every copy of the blockchain, on every single bitcoin node, at the same time, or gain access to over 50% of the mining power of the network. This makes it theoretically impossible.
There are a few common ways people lose their bitcoin. Neither involves the blockchain being compromised. It had nothing to do with the network or ledger. Your Bitcoin can be rendered irretrievable, which can happen in a few ways.
The blockchain does not care which person has access to the private key. There are no accounts, and there are no names. The person who has control of the key has control of the funds. This makes it incredibly secure, and also brings incredible responsibility. People often ask how to retrieve their stolen Bitcoin. The answer is the private key.
It may seem like a small distinction, between being lost, and being hacked. But it’s an incredibly important one. The blockchain itself remains secure and always has. The common underlying issue is the security of the private key. The Bitcoin Blockchain functions exactly as intended, and has done for every minute of every day since its creation in 2008.
I can already hear the words you’re muttering...
“Great, but if I can still lose my Bitcoin, who cares if the ledger is secure. You’re just arguing semantics”
And that would be a completely justified response...
I'm not here to say Bitcoin is completely secure and if you lose it, or it’s stolen, then that’s your issue. It’s our issue, one that the industry must solve if we’re to achieve any meaningful level of adoption. The concept of having complete responsibility for one’s own money can be daunting. But, with this responsibility, a great opportunity arises.
Through blockchain and cryptocurrency, we are able to create entirely decentralized systems of finance, free from control and corruption. We open up markets, create opportunities, and drive development for those who have been left out (by design), by the systems we’ve created. The opportunities are endless, we’ve just got to flatten the speedbumps.
If you’re interested in getting into cryptocurrency, but you’re not quite ready to jump into the deep end, check out a custodial feature such as Coinbase. This can be a great way to dip your toes in, before taking the plunge into true ownership.
If you’re ready to be your own bank and harness the power of blockchain, check out our Mobile Wallet. It’s the best wallet on the market.
If you want some tips on how to stay safe, we’ve got the blog for you 👉 How to keep your crypto safe!
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August 17, 2021 · 5 min read