How Safe Is Your Cryptocurrency?
It’s not necessary to understand all the ins and outs of aerodynamics in order to have enough confidence to take an airplane trip (in an airplane weighing several tons) without being nervous that the plane could fall out of the air. To some extent that same type of confidence also applies to anybody getting involved in cryptocurrency, i.e. there’s a lot of technology behind it cryptocurrency but the average user doesn’t know or care to know those minute details.
However, some questions for some subjects are worth a little more digging and one of those questions is, “Can cryptocurrency be hacked?”
The short answer is, “Yes, but it’s more likely that an airplane would fall out of the sky and land on a big pile of cotton candy and everybody gets a free ticket to the circus and a picture of themselves with Bozo the Clown and Eeka The Jungle Girl sitting on top of a pink elephant.”
But understanding why cryptocurrency doesn’t have any significant ‘off the wall’ risk is interesting because lots of people are very curious about it and are looking for enough logic to quell their emotional fear of it (cryptocurrency).
I found a good explanation on Quora and some other places today and I’m going to recycle it here because I think it’s good information to know when you talk to people who know almost nothing about cryptocurrency and for whom the ‘opportunity glass’ is always half-empty rather than half-full.
Here’s the answer:
The primary innovation beyond Bitcoin is not the currency but rather the underlying technology, …the blockchain. In its basic sense, the blockchain is nothing more than a ledger.
Yeah, a ledger. Just like you accounts used to make entries in. The blockchain just the digital version of that tool but in an entirely new, much more secure and feature-rich way.
But what about the security of those transactions on that ledger?
That security problem is solved by various aspects of the blockchain process. Not the least of which is the Public Key and the Private Key which is required to authenticate each cryptocurrency transaction on the blockchain.
Theoretically cryptocurrencies can be stolen but it is virtually impossible to do so because the sophistication of the complex algorithms and public and private key cryptography involved wherein a private key is required to use the bitcoins stored in an address (public key).
Theoretically, 2^160 bitcoins addresses (public keys) are possible. And each public key has 2^58 possible private keys. This is where things get tough. The number 2^160 is a gigantic number with 48 digits in it. Just think how big it is. And the number is:
So…you can see you’re more likely to get that autographed picture with Bozo and Eeka than get your cryptocurrency hacked or stolen.
The other way to do this is to hack a wallet. There are lots of those in the market and they can be hacked if somebody somehow gets access to your email ID or password. Just like somebody could get into your locker at school if they had the combination to your padlock (remember those!!?)
If it isn’t already, eWallet hacking is probably going to become a very large underground industry. Your personal diligence is very important.
Of course, a thumb-drive with your cryptocurrency data, kept in a safe somewhere is also a possibility and obviously they are not susceptible to electronic hacking once disconnected from the internet. You can even have a paper wallet, i.e. keep that info in handwritten form.
E-Wallet security is an industry that will grow parallel with cryptocurrency. But for now…. Don’t worry about Bozo, Eeka, feeding the elephant, or the airplane falling out of the sky….or getting your cryptocurrency hacked.
None of those events are likely to happen.
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