Is Bitcoin Hackable
Is Bitcoin Hackable?
Aaron, “Before we can talk about whether Bitcoin is hackable, lets get a good background on what blockchain is and how Bitcoin’s blockchain functions. Then we can tackle that question and we will also talk about some of the hacks that have already happened. So, a blockchain is really a literal description; it’s really just pieces of information that are bundled into blocks and then chained together so that you have a chronological record. In the case of Bitcoin all the transactions that have ever been made with the currency. “
Josh, “Right, it’s essentially just a ledger. I mean you think about the traditional Ledger whether you go way back in the day to just pen and paper or to a more modern ledger written up in Excel document. A block is an entry in that ledger and the chain is logging them all together in chronological order. What separates blockchain technology from traditional ledgers is that it’s immutable. So, I can’t log into someone else’s computer if i steal their password and make changes to the ledger and I can’t just find their paper Ledger lying underneath their mattress in their bedroom and erase entries so, it is an immutable ledger.”
Aaron, “The reason that it’s immutable is that it’s also what’s called a distributed ledger. When we’re talking about Bitcoin there are computers called nodes and these nodes run all of the software that’s required for processing new transactions and for validating the consensus rules for adding new blocks. When I make a transaction, If I want to send 20 bucks worth of bitcoin over Josh here than that pending transaction and all of the other pending transactions get thrown into a queue and eventually the miners will batch up those transactions into blocks. Assuming that the block has been solved and meets census requirements which are kind of a broad topic will be back for another day. Then boom you have a new block and it gets added to the blockchain and that specific block will contain all of the most recent transactions that were added up and processed. Now we move on to the main question of the day. Can you hack Bitcoin?
Josh, “Aaron we’ve seen it happened several times. The news always says Bitcoin gets hacked, of course, bitcoin can be hacked, right?”
Aaron, “Yeah well that’s why we’re making this video. It’s worth noting that there has been a lot of noteworthy newsworthy hacks in the history of Bitcoin but, these hacks were not on Bitcoins core software. They weren’t attacking the nodes and they weren’t able to change the ledger. What these hackers were targeting use the exchanges. I’ve got five of the biggest hacks here that I’ll rattle off for you.
Gox back in 2014 I was hacked for about 800,000 bitcoin
Bitcoinica in 2012 was hacked about 46,000 Bitcoins stolen
Bitfinix 2016 was taken for about 72 million dollars worth of Bitcoins
Bitfloor was hacked for about 24,000 bitcoins
Bitstamp was hacked back in 2015 for about 19,000 bitcoin
Josh, “What you’re saying is that Bitcoin can’t actually be hacked because it’s an immutable Ledger but these cryptocurrency exchanges are big targets.”
Aaron, “Absolutely so these exchanges a lot of times the run by a handful of people, has the crypto economy grows but all of these cases I just listed it was the website itself that was hacked and their internal wallets and procedures were compromised. Bitcoin hasn’t actually hacked itself. Now it’s worth noting that if you had enough time and enough computing power at your hands, you could potentially infiltrate the majority of nodes and start to make changes to the ledger. But, that would be such an astronomically huge amount of power required that I’d be surprised if most governments could even pull something like that off, I tend to doubt it.
Josh, “It’s also never happened before so there’s that.”
If you’re curious about how to protect your own Bitcoin, head over to our Hot vs Cold Wallet video. To understand the different types of wallets available and why you should choose one over the other.