Many people are convinced that digital coins will “change” the world and they are freaked out about the prospect of investing in Bitcoin, the cyber currency. Before you “lose your head”, however, you must first ask: is it safe?
Bitcoin is decentralized
What makes Bitcoin more secure than any other transaction system? Bitcoin is a decentralized payment protocol. So, the transaction system is not managed by a central location, but by millions of users in the network. Their computers are also known as nodes in the Bitcoin world.
In addition to the nodes, the Bitcoin network also consists of miners. These are users who use high-speed computers and video cards to solve cryptographic puzzles and add transactions to the blockchain. At the same time, that’s the great thing about Bitcoin: it is managed by everyone.
Do you want to influence Bitcoin’s transaction system? Then you need access to more than half of all computers in the Bitcoin network. This is also known as a 51% attack. The Bitcoin network is currently so extensive that this is almost impossible.
No one can change blockchain transactions
The design of the blockchain is another characteristic of Bitcoin that has to do with the security of Bitcoin. All Bitcoin transactions are recorded on the blockchain. A new transaction block is added every ten minutes.
This new block is connected to the preceding block which is connected to the previous block. Each block also contains some information from the prior block.
But what makes this chain so secure? The further you go back in the chain, the more difficult it will be to manipulate the blockchain. That would mean that you would still have to manipulate all blocks afterwards. And all this while the Bitcoin network is already working on the current chain. Alone, it is impossible to compete with the thousands of nodes in the network. If you want to do that, you’re always behind the times.
Security is also your task
Bitcoin is based on security. But you can also take measures to use the Bitcoin network securely. Below we give you some tips so that you can use Bitcoin as safely as possible.
Preferably use a wallet
This is the safest way to store your Bitcoin. A hardware wallet ensures that access to your bitcoins remains offline and encrypted. This way, only you have access to your own bitcoins.
Many people keep their bitcoins on a cryptocurrency exchange or on an online wallet. It’s just a lot less certain. An exchange is a central party. What if the stock exchange will be hacked? Then there is a good chance that your bitcoins will be lost. The private keys of your bitcoins are stored online on an online wallet. This also increases the risk of losing your bitcoins. A hardware wallet is therefore a wiser choice!
Keep your backup sentence offline
Whether you’re using an online wallet or a hardware wallet, it’s always a good idea to keep it offline. A backup sentence is a random concatenation of 12 to 24 words. Sometimes this is also called a seed phrase.
With this backup set you can always reach your bitcoins. Even if you lose access to hardware wallet. Or, for example, if you lose your login or password for your online wallet.
We also strongly recommend that you write this backup set on a piece of paper. In other ways, you can make it easy for hackers to reach your wallet. For example, you took a photo of your 24 words? Then a malicious person can still get to your bitcoins as soon as they have access to your phone.