Security
Security: Bitcoin is 10 years old and so far the most successful cryptocurrency. Bitcoin uses SHA-256 encryption for both its Proof-of-Work (PoW) system and transaction verification. The Bitcoins decentralized system was never hacked.
Yes we had hacker attacks, e.g. Mr. Gox. In 2014 hackers managed to hack major Bitcoin exchange Mr. Gox and steal about 850.000 Bitcoins.
But it was hack on exchange and not on Bitcoin blockchain itself. Bitcoin has no responsibility for it.
Nevertheless, there are certain technical aspects of bitcoins that cause danger.
Vulnerable wallets, A report by a team of researchers from Edinburgh University said they found weak spots in hardware wallets that can be exploited.
According to the same research, even the heavily encrypted hardware wallets were still vulnerable due to that loophole.
Using malware, the scientists were able to intercept communication between the wallet and PCs. This security breach affects the privacy of Bitcoin users because their funds can easily be diverted to different accounts. (tripwire.com/state of security)
The question that must be answered here is a wallet part of the Bitcoin?
Selfish Mining
Also called block withholding, a pool may use their computational power to mine a block and then hide it from honest miners instead of broadcasting the new block to the network. The selfish pool then attempts to find the second block while the rest grope in the dark. (tripwire.com/state of security) This danger is only relevant for miners.
Double Spending
Some people might still be able to constitute attacks that would make them benefit from using the same coin twice in the same transaction. For instance, Bob purchases items from Alice and sends Alice x bitcoins.
At the same time, Bob executes a similar transaction to an address he controls using the same Bitcoins. Though Alice may believe that Bob has sent the money and may not bother to confirm, Bob's address may be credited with the transaction while Alice's won't get the contemplated transaction.
Irreversibility then makes it pointless for Alice to get the transaction invalidated. And there is no recourse because Bitcoin is unregulated. (tripwire.com/state of security)
Here we see how fast advantage „ No Middleman" becomes a disadvantage. Considering how often mistakes happen, it is human to err, i ask myself is bitcoin the right one for humans?
51 Percent Attacks
The 51 percent attack is a security concern for Bitcoin, even if it is not easy to do.
The increasing difficulty of mining Bitcoin has meant that miners get into pools to bundle up their computing power.
The danger starts, when a pool becomes too powerful that it can manage to command over 50 percent of the mining power, it then poses a threat to Bitcoin network.
It could go on to manipulate transactions by either mining "invalid" blocks or double-spending.
The biggest mining pools for now: AntPool; 28%, F2Pool 21%, BTCC Pool 13%
Considering the current distribution and future difficulty for Bitcoin mining, there is legitimate danger of a silent transition from the decentralized to centralized system.
Heads up...
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