For years banks were robbed by groups of skilled people with guns, which took cash in bags. With the popularity of electronic payments in the last 50 years came more sophisticated attacks on banks, credit cards, which were frequently traceable to the attackers and resulted in little damage to the private customers. Today a robber can steal millions directly from the person’s wallet and get away with it without stepping out of his bedroom. Bitcoin hardware wallet It is probably happening right now somewhere in the Bitcoin world.
For the past five years Bitcoin sparked a revolution in the finance sector and created a new ecosystem for currency exchange without borders and with anonymity. Its rise from enthusiasts’ trial to the worldwide fame has been meteoric and the potential to disrupt existing reality is just being tapped into.
Today there are almost 14 million BTC in circulation, which amount to 4 billion dollars. Merchants all over the world accept Bitcoin in exchange for goods and services.
As a digital currency, Bitcoin is based on the unique personal secret private key and derives its security from strong crypto algorithms, like SHA2 and ECDSA. While the algorithms are unbreakable in the reasonable amount of time, the human factor remains a problem. It is often enough to get access to bitcoin owners PCs and smartphones or to the servers of the traders to get the private keys to steal bitcoins and use it’s anonymity to disappear. The inability to reverse transaction serves as an advantage over regular money thefts.
Thus the thieves in the cyber world work hard to break through digital defenses and get access to the large amounts of money with no danger to themselves. And they frequently succeed (like in BTER 1.75 million dollar cold wallet attack just a month ago or 19000BTC stolen from BitStamp). The digital nature of Bitcoin means that there are many proven methods of attack from the cyber world, while the individuals or private firms do not have the resources to effectively counter these attacks. Moreover, the attacker could come from inside the organization and copy the keys to the money directly from the servers. It is almost impossible to guard against this kind of attack.
The security in Bitcoin world is the main issue in the way to gain trust of a crowd in everyday use. It should be transparent in everyday life and unbreakable to any hacker. Today we have to choose between ease-of-use and security, and most will go for ease-of-use, just as any normal payment method (like a credit card). Bitcoin ecosystem needs much better security to preserve its momentum and gain wide adoption.