Bitcoin is a digital currency that was created in the year 2009. It is a decentralized cryptocurrency that relies on a peer-to-peer network known as blockchain that helps in recording transactions rather than any other regulatory body. If you buy bitcoin in India, you must understand its features and investment process. However, there are no physical bitcoins, and their value varies depending on the market.
It is noted that Bitcoin technology is mostly secure as it is created on safe technology called the blockchain. It is also cryptographic, public, permissionless, and decentralized. However, it is subject to market volatility when it comes to trade. The most known reasons why Bitcoin is mostly safe are –
- Bitcoin is public
- Bitcoin works on secure cryptography
- Blockchain does not require permission
- Bitcoin is decentralized.
How Safe is Bitcoin?
Several elements assist in securing bitcoin from stealing. Cryptography maintains the invention and transfer of a cryptocurrency, and the protocols underlying bitcoin have been confirmed to be substantial. Bitcoin’s use of a disseminated ledger technology (DLT), typically known as the blockchain, gives owners a chronology of all their trades that cannot be tampered with because there is no single point of loss.
Bitcoin’s DLT transparency means all transactions are open to the masses. Still, the individuals involved remain anonymous, so there is no chance of a data breach as with standard financial systems.
Also, if you are concerned that is bitcoin legal in India then you can rest assured that transacting in Bitcoin is not illegal in India. However, the profits gained by the same will be subject to tax payment.
What Are the Risks related to Bitcoin?
Like any other digital activity, the most significant security concern for many people regarding Bitcoin investing is the threat of hacking and forgery. As per the Federal Trade Commission’s data, Cryptocurrency crimes are on the rise and resulted in a median loss of $1,900 as per the report between October 2020 and March 2021.
According to the FTC, reported crypto crimes often involve scammers demanding payment in cryptocurrency or sending unsolicited offers to assist you in making money or increasing your holdings. “One sure sign of a scam is anyone who says you have to pay by cryptocurrency,” the agency mentions. It would help if you also avoided any unsolicited offers related to crypto; do your research and buy your coins yourself using a reputed crypto exchange.
How to keep Bitcoin safe?
The most reasonable way to keep your Bitcoins safe is to have your secret key stored in a device or an application that is not connected to the internet or in a non-digital structure, such as noted on a notepad. When your private key is stored somewhere that doesn’t commune to the internet, it is known as a cold wallet.
Physical cold wallets can be kept in fireproof safes or other secure places. A safe deposit box at a bank could be another option, although those are not necessarily proof as objects could still be lost or impaired. One could also add a layer of protection to your cold wallet by encrypting the device. Or, in the matter of a noted private key, altering a few digits so it won’t be usable by others.
Some people prefer to keep their Bitcoins in an online digital wallet, mainly if they frequently buy and sell the currency or want easy access to their digital wallets from different devices. Many online cryptocurrency platforms or exchanges will create a wallet for you when you open an account.
Many platforms will also keep much of the Bitcoins in their system in cold (offline) storage, and it only has a small percentage of hot (internet-connected) storage. Like how a local bank branch does not have enough cash to cover all its customers’ deposits in its vault. As an outcome, a hack won’t necessarily put Bitcoins belonging to all their users at risk.
Past, where you store your wallet, the most prominent risk factor may be human. The scams in cryptocurrency are rising, and fraudsters may try to get you to share your private key or account details. Or get you to install software that infects your devices and steals this information.
Article by Muhammad Saad Shafiq
