Can Bitcoin be hacked? Every week, we receive dozens of casual questions all about Bitcoin currency hacking, including “can Bitcoin be hacked?”, “is it possible to hack any blockchain currency?” And “how secure is blockchain technology?”
In fact, to accurately answer these questions, we should pay attention to the governmental efforts and endeavors to develop such a promising technology and minimize the risks that may compromise its advantages. For example, Estonia announced an ambitious plan to model a blockchain-based system to secure more than one million medical records in 2017.
In parallel, the British government signed the first blockchain platform-as-a-service agreement with blockchain platform provider Credits last August, selected by the Royal Commercial Service. At present, the British government is hoping to expand its current experiment by using distributed ledger technology, which can sell products via electronic marketplaces moderated by a government agency.
Can Bitcoin Be Hacked Despite All The International Contributions In Security?
Russia has also realized that Bitcoin and other cryptocurrencies represent global economic prospects. It initiated in September 2020 a constructive project seeking to adopt such currencies and effectuating their features and characteristics.
Work is well underway in the country. Research in that regard is carried out by Sberbank, Russian Post, and the National Settlement Depository. It was reported that Acronis International had contracted three large Russian banks and agencies to provide blockchain solutions, which can achieve higher financial returns and, at the same time, reduce the hacking possibilities.
After all, although there are genuine attempts to protect cryptocurrencies and make their transactions safe, recent experience has demonstrated that all cryptocurrencies are subject to hacking attacks, particularly by the programmers and crackers who can penetrate secure access codes and shut down the blockchain network.
Additionally, because hacking pursuits are increasing, the bitcoin blockchain can be compromised, and its transactions may be totally controlled.
First of all, let’s consider the claim arguing that blockchain network is doomed to fail. That requires analyzing the cryptocurrency technology and recognize its operational methods. In fact, the distributed way that creates and validates transactional data is considered the key strength of blockchain technology. Being a decentralized service, the blockchain network runs on various servers and nodes scattered worldwide.
The Proof-of-Work consensus algorithm ensures that miners can only verify the new blocks when the nodes collectively agree to authenticate them. It is known that each cryptocurrency has its own blockchain, besides thousands of active nodes that constantly monitor financial dealings. Thus, to be able to control the blockchain fully, a hacker needs to access all servers and nodes simultaneously, which is quite problematic.
Can Bitcoin Be Hacked? A Robust Means & A Brightful Future
Before answering the question “, can Bitcoin be hacked?” We should realize that the hacker should penetrate 15000 servers simultaneously to capture the Bitcoin blockchain. Meanwhile, the recent successful attack on one of the most ambitious blockchain-based projects – DAO, which was regarded as “the world’s first fully autonomous investment fund” – has drawn public attention to the security issues facing Bitcoin technology.
To clarify these issues, Robert Schwertner, an expert in the field of cryptography and computer security, explained & answered, “what security threats can arise when using blockchain technology?” When considering security threats, which surround the Bitcoin transactions, the 51% attack is most often remembered – when a hacker can print new blocks for an infinite time and expose what is happening in a typical blockchain.
He also added, “for example, I paid money, initiated a transaction, and then printed a blockchain that overtook the network. Thus, the transaction is revoked, and the state of the blockchain changes retroactively. Despite being a successful method, the 51% attack is practically impossible to implement.”
Schwertner also answered the important question, “can Bitcoin be hacked?” saying that it is theoretically possible, as miners began to use more advanced devices that can increase their chances of winning rewards. Some miners decided to form so-called “mining pools” and combine their hashing power, distributing the rewards equally.
This phenomenon turned out to be the first major threat in blockchain history. After all, if the three largest mining pools suddenly decide to cooperate, they will dominate the network and approve fraudulent transactions.
However, Schwertner added that this method is realizable only with the Proof-of-Work (PoW) algorithm, as the Proof-of-Stake (PoS) mechanism requires that a hacker own more than 50% of the total market capitalization. Taking Bitcoin as an example, the hacker should pay $79 billion to acquire 51% of the network supply capacity.
This makes the 51% attack seem totally impractical since the considerable cost will eradicate any earnings that hackers can acquire.
The Majority Attack & The Mining Monopoly
Tim Draper, one of the most important Bitcoin investors, raising the same question to him that arouses our minds “can Bitcoin be hacked? His answer was the same. He also stated that any hacker with sufficient processing power could deliberately exclude and revoke transactions that nodes make, leading to a double-spend problem.
Also, a successful “majority attack” will allow the hacker to prevent the transaction confirmation, which will cause a mining monopoly.
In contrast, any hacker will find serious difficulties if he tries to:
- Undo transactions verified by nodes.
- Prohibit and broadcast the network transactions.
- Change rewards.
- Steal coins that never belonged to the hacker.
A Golden Rule Governing The Bitcoin Transactions
Since many nodes support the Bitcoin transactions, they work together to achieve consensus—the more extensive the network, the greater the protection against attacks and data corruption. Consequently, any attack on Bitcoin blockchains becomes less risky as the network size is constantly increasing.
In addition, as the blockchains grow, changing previously checked blocks becomes more burdensome. The blocks are linked to each other, so a specific block can only be changed if all subsequently confirmed blocks are discarded.
Hence, a successful attack will be able to change the recent blocks transactions, but only for a short period of time. Even if a hacker aptly succeeds in completing a full 51% attack, the blockchain quickly adapts, returning the state of all blocks to their original condition.
However, Draper added, although blockchain is still the most secure technology today, other threats limit its system security.
For example, if an algorithm effectively factorizes elliptic curves, then a problem will appear. Theoretically, it will be possible to pick up the wallet’s private keys and track the transactions already been spent.
Every user wallet has a password. Even if an intruder steals your wallet, he will not be able to do anything. But if he steals both the wallet and the password, then it is your turn to do nothing – you will lose your money and security data as well.
However, rest assured, the Bitcoin technology looks relatively safe, as it is supported by several financial firewalls, which make hacking attempts extremely difficult. That helps the Bitcoin network effectively work for thirteen successive years at the time of writing.
