Can Bitcoin be hacked? 🥷
💡 Daily Reminder: Stay humble, stack sats
Bitcoiners,
If you are storing wealth in Bitcoin, you may want to know how secure your investment is in the Bitcoin protocol.
Here are some of the top vulnerabilities to consider in the Bitcoin protocol so you can better understand how safe your funds are in the decentralized protocol.
Note, this article highlights Bitcoin's network security. Bitcoin users can experience different types of personal attacks or hacks that result in the loss of their funds.
Cryptography
There are two main cryptographic algorithms implemented in the Bitcoin protocol: ECDSA and SHA-256.
The digital signature algorithm, ECDSA, is what allows bitcoin transactions to happen in a trustless manner. If this algorithm was cracked, an attacker could sign transactions and spend bitcoin that do not belong to them. SHA-256 is the hash function behind Bitcoin mining and a few other aspects of Bitcoin. If SHA-256 is ever cracked, such as by a quantum computer, a malicious miner can theoretically take down the network.
51% Attacks
A 51% Attack scenario involves a malicious miner or group of miners reversing previously settled blocks to attack the network.
One of the major problems Bitcoin solves is the double spend issue, which means one bitcoin can be spent multiple times. Gaining more than 51% of the total mining computing power grants the possibility of double spending bitcoin. The amount of money and energy needed for a single party to implement this kind of attack is astronomical and highly unlikely.
DDOS Attack on Nodes
A malicious attacker can implement a DDOS attack to compromise most nodes in the network and change the rules of the protocol.
There are 10,000+ nodes distributed around the world. A DDOS (Distributed Denial of Service) Attack is an attempt to take a majority of nodes offline so they can no longer communicate with each other to implement the rules of the Bitcoin protocol. Bitcoin is engineered to prevent these types of attacks and continuous improvements are being created and implemented to further prevent a successful DDOS Attack.
Happy Saturday,
-Pod
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Eric Podwojski
Founder, Bitcoin EDU
Twitter:Â @epodrulz
Disclaimer: This should go without saying: This is not financial advice. This is not investment advice. I write this newsletter for education and entertainment. Act accordingly.