Bitcoin is a relatively new technology, but over a decade of existence, it has proven itself to be the safest digital system in the world and the most reliable monetary system ever invented.
hack bitcoin
However, due to the young age of the network and its rapid development, Bitcoin faces many doubts about its security in the future. As a store of value purely in the digital environment, unsupported or insured by any organization behind it, this raises concerns among new users or those not well-versed in technology about vulnerabilities in Bitcoin’s cryptography or blockchain technology.
Nevertheless, the Bitcoin network has proven itself resilient against all attacks. The blockchain itself has the ability to combat economic and technical inflation.
“The Bitcoin blockchain has never been hacked”.
Can Bitcoin be hacked? Theoretically yes, but practically no.
In today’s article, we will explore the reasons why in practice, Bitcoin cannot be hacked!
Table of Contents
Security Mechanism of Bitcoin – How secure is the Bitcoin blockchain?
Blockchain Technology
Blockchain is a distributed digital ledger where all Bitcoin transactions are publicly recorded and cannot be altered. Each block in the blockchain contains a set of transactions, and these blocks are linked together in chronological order through hash codes.
Each new block added to the blockchain must contain the hash code of the previous block, forming a continuous and secure chain. This ensures that once information is recorded in the blockchain, it cannot be altered without changing all subsequent blocks.
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Proof of Work Mechanism – Proof of Work (PoW)
Proof of Work is a consensus mechanism used to verify transactions and add new blocks to the blockchain. In this system, miners compete to solve complex cryptographic puzzles. The first to solve this puzzle is allowed to add a new block to the blockchain and receive a reward in the form of Bitcoin.
PoW plays a crucial role in protecting the Bitcoin network by requiring miners to use a large amount of resources (computational power and electricity) to solve puzzles. This makes attacking the network extremely costly and economically infeasible. To attack the Bitcoin network, a hacker would need to control more than 50% of the total computing power of the entire network (a 51% attack), which is nearly impossible given the current scale of the Bitcoin network.
Decentralized Network
Of course, in the world of crypto, there are many different blockchains using various technologies. But Bitcoin is particularly special because it uses the Proof of Work mechanism and is more decentralized than all other blockchains in the crypto world. This helps Bitcoin top the charts not only in terms of market capitalization but also in terms of decentralization and security.
Bitcoin operates on a decentralized network with thousands of independent nodes worldwide. There is no single management center or server that controls the entire network. Each node in the network holds a copy of the entire blockchain and participates in verifying new transactions. This creates a decentralized system with no single point of weakness to attack.
If a computer tries to cheat or is compromised, the Bitcoin network will reject invalid data and continue to operate normally. This decentralization ensures that every computer in the network maintains a shared and valid copy of the blockchain, thereby protecting the security and integrity of Bitcoin.
Bitcoin is like a creature with a thousand heads scattered everywhere, while you have only one gun, you cannot shoot all 1000 heads at once to destroy it, you can only attack each head individually, but then it will grow a head elsewhere. And forever you will never be able to attack Bitcoin.
But hypothetically, if you gather 1000 guns from all over the world to attack it at the same time, you will destroy this creature. But this is very difficult to do in reality, because while you are gathering resources by buying guns, dispersing resources, your actions are easily detected by the creature, and it will maneuver to avoid your attack.
Bitcoin’s decentralization makes it extremely difficult to attack. To carry out a successful attack, a hacker would need to simultaneously control thousands of nodes worldwide, which is impractical. Furthermore, distributing data across multiple nodes ensures that even if some nodes are attacked, the network continues to operate normally and remains unaffected.
Although no system is perfect and immune to attack, Bitcoin has demonstrated its security and reliability over time, becoming one of the safest and most trusted digital asset networks in the world. Where billions of dollars are stored by users worldwide.
Is the market too optimistic when storing billions of USD on a vulnerable and attackable network? No, the market stores billions of USD in Bitcoin because it is the safest and most robust network in the internet environment.
There is a proportional relationship in the Bitcoin network, when the price of Bitcoin becomes higher, more people will use Bitcoin, more miners will participate in mining Bitcoin for profit, more nodes will be run, more electricity will be used so the Bitcoin network will become stronger and harder to hack, and so Bitcoin will develop, it will become stronger.
Bitcoin’s Incentive Model
Bitcoin uses a special reward and punishment mechanism to protect the network from attacks and encourage positive contributions from participants.
When a miner successfully creates a new block by solving a complex cryptographic puzzle, they will receive a reward in Bitcoin. Currently, the reward is 3,125 BTC per block (halved after every 210,000 blocks). This creates a significant financial incentive for miners to protect the network rather than attack it.
In addition, miners also receive transaction fees from the transactions they confirm in the block. These fees encourage them to maintain and protect the network.
To carry out a Bitcoin network attack, such as a 51% attack, requires a huge amount of resources, as the attacker must control more than 50% of the total computing power of the entire network, making it extremely costly and nearly impossible. Instead of attacking, miners can use these resources to support the network and receive significant rewards.
These economic incentives, combined with Bitcoin’s core design, have prevented a successful 51% attack against Bitcoin.
Potential Attacks on Bitcoin
51% Attack
A 51% attack occurs when an individual or group controls more than 50% of the total computing power of the Bitcoin network. If they control the majority of computing power, they can perform fraudulent actions such as reversing confirmed transactions, preventing new transactions, and double-spending Bitcoin.
In practice, carrying out a 51% attack is very difficult and costly. The current Bitcoin network has enormous computing power, requiring a large amount of mining equipment and electricity. The cost to set up and operate such an attack would be very high and nearly economically infeasible for most individuals or organizations.
For example, in 2021, the computing power of the Bitcoin network reached over 150 EH/s (exahashes per second). To control 51% of this figure, a hacker would need an incredibly large amount of resources, making this attack nearly economically infeasible.
Satoshi Nakamoto, the creator of Bitcoin, outlined the mechanism and mathematics of the 51% attack on page 8 of the Bitcoin whitepaper.
As the Bitcoin network grows and its price rises, the hashing rate of Bitcoin mining tools also increases. This trend has continuously made 51% attacks “more difficult to perform,” making Bitcoin more secure. As the price of Bitcoin continues to rise, the hashing rate and security of Bitcoin will also continue to increase. Combined with the available incentive model of the network mentioned above, carrying out a 51% attack is almost “impossible” in practical terms.
Denial-of-Service Attack (DDoS)
A distributed denial-of-service (DDoS) attack occurs when an attacker sends a large number of requests or transactions to the network to overload the system. The goal of DDoS is to disrupt the operation of the network, causing legitimate transactions to be delayed or unable to be performed.
How Bitcoin prevents DDoS attacks:
Transaction Fees:
High cost for attackers: Each transaction on the Bitcoin network requires a fee. This increases the cost for attackers if they want to send a large number of transactions to overload the network. The high transaction fee makes DDoS attacks very expensive and impractical.
Resource Limits:
Transaction size limit: Bitcoin transactions have limits on the resources they can consume, including size and number of inputs/outputs. This helps prevent complex or oversized transactions from overloading the network.
Bitcoin Script:
Prevent infinite loops: Bitcoin Script, the programming language of Bitcoin, does not support infinite loops. This prevents attackers from creating transactions that deplete the resources of network nodes by forcing them to process endless loops.
Decentralized nature of the Bitcoin network:
Thanks to the Bitcoin network with thousands of nodes worldwide, DDoS attacks become more difficult. Even if some nodes are attacked and stop operating, the network can still continue to operate normally thanks to other nodes.
Combining the above measures helps Bitcoin counter DDoS attacks and maintain the security and stability of the network.
Software Vulnerabilities
Like any software, Bitcoin can contain bugs in its source code. These bugs can be “exploited” to perform fraudulent activities or disrupt the operation of the network.
On August 15, 2010, the Bitcoin network experienced a serious incident called the “Value Overflow Incident,” when an unidentified hacker created over 184 billion Bitcoin out of thin air. This incident occurred due to a bug in Bitcoin’s source code, where the transaction checking code did not function properly when outputs were too large, leading to a value overflow.
Satoshi Nakamoto, the creator of Bitcoin, quickly took action to fix this issue by releasing a bug fix and implementing a hard fork to remove illegally created Bitcoin. Within hours of the incident, the network was restored and continued to operate normally.
The Bitcoin community always focuses on detecting and fixing software vulnerabilities. This process includes regular code reviews, organizing security contests to find vulnerabilities, and encouraging community contributions to improve the source code.
In 2018, a serious security vulnerability was discovered in the Bitcoin Core software (CVE-2018-17144). This vulnerability involved two main issues: denial-of-service (DoS) attacks and inflation bugs.
DoS Vulnerability:
The DoS vulnerability allows an attacker to create a double-spend transaction and include this transaction in a block with sufficient proof-of-work. If successful, the attacker can prevent legitimate transactions from being confirmed, causing disruption to the Bitcoin network.
Inflation Bugs:
The inflation bug allows an attacker to create new Bitcoin out of thin air, violating Bitcoin’s strict monetary policy of a fixed supply of 21 million coins. This could undermine confidence in the Bitcoin network and its value.
To address these issues, the Bitcoin Core developers released a security patch to fix the vulnerability. Users were urged to update their Bitcoin Core software immediately to prevent potential attacks.
Thanks to the prompt action of the Bitcoin Core developers and the cooperation of the Bitcoin community, the vulnerability was successfully fixed without any significant impact on the network. The incident demonstrated the resilience of the Bitcoin network and its ability to quickly respond to security threats.
Advice for Users and Investors on Protecting Their Assets
Although Bitcoin has existed for over a decade and established itself as a secure digital asset, it is still often misunderstood, especially by those outside the crypto market or new market entrants who are influenced by media reports of hacks related to Bitcoin.
One of the most common misunderstandings is that Bitcoin is frequently “hacked.” In reality, the reported “hacks” are usually not related to the Bitcoin network itself but rather due to user security errors or insecure exchanges. Here are some ways to protect your valuable Bitcoin.
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Use a Cold Wallet
To protect your Bitcoin from online attacks, use a cold wallet, a type of wallet that is not connected to the internet. For example, you can use hardware wallets like Ledger or Trezor to store Bitcoin safely.
Secure Your Accounts
Ensure that you use strong passwords and enable two-factor authentication (2FA) and yubikey for all your accounts related to Bitcoin, especially exchanges and online wallets.
Be Wary of Scams
Avoid clicking on unknown links or providing personal information to untrustworthy websites. Phishing scams and fraudulent ICOs are common in the crypto market.
Choose Reputable Exchanges
When trading Bitcoin, select reputable exchanges with a history of strong security measures. For example, exchanges like Coinbase, Binance, and Kraken are known for their robust and reliable security practices.
Conclusion
The Bitcoin network has operated smoothly and securely for many years. The initial mathematical foundations accounted for the 51% attack in theory, but given Bitcoin’s current acceptance and development, it is nearly impossible in practice.
Therefore, instead of worrying about the Bitcoin network being hacked, users should focus on protecting their assets in the best possible way to avoid theft. Using modern security measures and being vigilant about threats are key to ensuring the safety of your assets in the crypto market.
