Bitcoin is being used widely all across the world. People have now started to put their trust in digital currencies and have adopted them as a lifestyle. This wide use of bitcoin seems that almost every person in the world will start using digital currency as a payment method in the future. But here are some security risks attached with the use of bitcoin, due to which people are not able to trust it completely. So there is a need to raise awareness about bitcoin security in beginners and new investors. In this article, I have briefly highlighted the security of bitcoin and why people should keep trusting it; for further investigation about bitcoin security, sign in to software
A security concern related to a bitcoin transaction is called transaction malleability. Because in bitcoin transactions, the data doesn’t cover all the transaction details; it just mentions a few necessary details. The hackers can easily access the transaction information and make slight changes, like changing the transaction ID. This change of ID will make the sender lose track of the transaction and think he needs to create a new trade as the previous one didn’t get approved. The transaction was called approved, but the sender doesn’t have its track. The receiver will also think that the transaction was not made and ask the sender to send it again. And the sender will have to lose its money twice. One could manage this problem if One did not track transactions with tracking ID but with the details of owner and receiver.
Security Wallet Management
Every bitcoin has security keys of bitcoin which they use to make transactions of bitcoin. The owner will have to use that security key if they are sending that bitcoin to anyone, or if they are receiving the bitcoin, the sender will give them the security key of that bitcoin. These secure the security keys in some files in hardware or ICloud of the owner. But the keys are not connected there as the hacker can easily access those security keys and will be able to use the bitcoin by themselves. If the owners are sure about the security of those keys, they can keep them by themselves. But if they are not sure about it, they can hire a third party to keep the keys secure and provide them to the owner whenever needed.
Private Wallet Management
In the mechanism of private wallet management, the owner of bitcoin has the keys by himself. Mainly they are secured in the form of any file. One can also store the keys by writing them on paper and secure them in the locker etc. But this also has the risk of being stolen. In digital files, there is a continuous risk of storage issues. If your device has storage issues, they can crash the file, and the user may have to lose all the security keys, which is an irreversible and unreturnable action. Another possible conclusion is that the owner stores them in different devices or different places, but it puts the keys at more risk of getting attacked if the hacker can access any one of them. Now bitcoin has a storage mechanism in which they provide the login id to their digital wallet where the owner can log in or log out according to their convenience, and the attacker can also not attack it while logged out. This mechanism is called the cold storage mechanism.
Third-Party Wallet Management
Third-party wallet storage is the process in which the owner gives access to its security keys to a trusted source, and that source will have to be responsible if the keys got hacked in any case. But there is a risk factor also that the identity of bitcoin owners will no longer be anonymous as they have to provide all their information before registering with a third party. The third-party wallet management used the hot storage method, the method in which they secure the keys online and in live computers puts the wallet at more risk of attack by hackers. This mechanism also forbids the user from using their bitcoin independently because they can not send or receive new bitcoins without the permission of a third-party wallet.