Can Bitcoin and the Blockchain be Hacked or Shut Down?

Bitcoin and blockchain security hack

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The security of Bitcoin and cryptocurrency often makes the headlines when there’s been a high profile hack.

This usually involves nefarious actors raiding an exchange and draining user accounts, or somehow scamming crypto owners into parting with their coins.

Other people have seen their crypto syphoned away in complex Ponzi schemes or targeted social engineering scams.

But what about the actual blockchain itself? Can the underlying technology behind Bitcoin and the distributed leger be hacked or shut down? And has Bitcoin ever been hacked?

Bitcoin was launched in 2009 and to date there has never been a reported hack of the blockchain – the record of all transactions made using the digital currency.

Also, as far as anyone knows, there are no counterfeit Bitcoins in circulation, demonstrating that the world’s most popular cryptocurrency has so far proved robust in resisting attacks from hackers.

Related link: Common Bitcoin and crypto scams and how to avoid them

Bitcoin security – can the blockchain be hacked in the future?

Bitcoin’s blockchain is not completely bulletproof, with numerous theoretical ways of attacking the underlying technology.

Although there have been many years in which to find a vulnerability, so far nothing has been found that’s presented any major threat to the network.

But that’s not to say that a weak spot won’t be discovered tomorrow.

Some people believe quantum computing poses a real threat to Bitcoin’s encryption – known as elliptic curve cryptography (ECC) – at some point in the future when the technology advances.

And bugs and flaws in code are being found in code all the time, even among the big players such as Microsoft, Apple and Google.

This is why substantial bounties are offered for those who discover them and do the honourable thing and report issues rather than use the knowledge to carry out nefarious activities.

So, although the blockchain technology underpinning Bitcoin, is being constantly monitored by some of the biggest brains on the planet, there’s always the possibility that an even bigger brain will come along and spot something they haven’t.

Will quantum computers be able to crack Bitcoin?

Despite some false starts and exaggerated claims, quantum computers are coming.

At present, the technology is relatively nascent, and the quantum computers of today are really only useful when it comes to doing a very limited number of specific tasks well.

But billions of pounds are being poured into developing what those in the sector see as the next big leap in computing technology – machines that can solve mathematical problems in seconds rather than decades.

No-one yet knows when this technology will begin to properly supersede the computers we’re familiar with today, but it’s highly likely it will happen in the not too distant future.

And no-one knows if the development trajectory will enable these new machines to break open the protective layers surrounding Bitcoin and the blockchain.

However, if the day arrives when a quantum computer can crack Bitcoin, it would likely signal the collapse of the global financial system as we know it because the technology would render the security features used by banks and other financial institutions useless.

Was Bitcoin created with a mathematical back door?

This Forbes article explains that the ECC used for Bitcoin was originally designed by the United States federal government.

This, in theory anyway, raises the possibility of a back door having been built into the very foundations of the blockchain which could be exploited at any time by the  government.

Although unlikely, the facts won’t get in the way of a good story and this conspiracy theory is likely to run and run.

Also, if such a back door did exist, it raises the question as to why it hasn’t been used yet.

Given ongoing concerns about criminals using Bitcoin as way of moving their illicit gains seamlessly around the globe, and governments such as North Korea evading sanctions using crypto, it makes you wonder why the kill switch – if it exists – hasn’t been activated already.

What protects the Bitcoin blockchain from being hacked?

The beauty of Bitcoin and the blockchain is that no one person or organisation has control over it.

In fact, hundreds of thousands of computers and people around the world all collaborate to ensure the smooth running and security of the distributed ledger – the record of all Bitcoin transaction.

These network participants run what are called nodes which host an entire, up-to-date copy of the Bitcoin blockchain which is constantly synching and checking the validity of transactions.

All nodes follow a set of rules that keep the network running. These rules cannot be altered without group consensus.

This peer-to-peer network actively works together to protect the blockchain from hackers by sending out an alert if anything untoward is detected.

What is a 51% attack and could it threaten the security of Bitcoin?

A 51% attack on Bitcoin is a theoretical situation which would arise if a malicious actor where to gain control of 51% or more of the total computing power of the network.

Once they had control of the hash rate, as the Bitcoin mining process is called, they could in theory alter blocks that had previously been added to the blockchain and steal the Bitcoin they relate to.

In reality, there are a number of reasons why a 51% attack is unlikely to happen. Two of the main problems are cost and market impact.

If you’ve ever Googled Bitcoin mining farms you’ll have seen the pictures of huge warehouses stacked floor to ceiling with expensive specialist mining equipment.

It’s possible that you’ll have also read the stories about how Bitcoin mining now requires the energy of a small country to perform due to the increasing computing power required to crunch new blocks for rewards.

This means you would need a vast amount of money, equipment and access to electricity to perform a 51% attack in the first place.

Even if someone were to pull together the resources to do so, the impact of such an attack would likely crash the Bitcoin market overnight.

So, unless the person behind the attack just wanted to watch the world burn, as the famous quote goes, it would be a pretty pointless exercise if their aim was financial gain.

What happens if the internet fails or is shut down?

If you’re wondering if Bitcoin could survive without the internet, the answer is probably yes.

There are several reasons for this. Firstly, all the nodes in the network would continue to store the last available up-to-date copy of the blockchain even if disconnected from the internet.

If the internet had somehow been taken offline then later restored, these computers could resume their work at this point, albeit with an outdated blockchain.

However, this is a hurdle that could technically be overcome through a process of consensus agreement with all parties involved in maintaining the network.

Also, you may not realise this, but Bitcoin nodes already operate outside of the internet via the satellite network and even radio.

Can the entire Bitcoin network and blockchain be shut down?

We’ve already considered the (highly unlikely) situation where a back door was programmed into Bitcoin’s code in the event that a state organisation wanted to take control of it.

But are there any other scenarios where Bitcoin could be ‘switched off’?

There are a couple of theories doing the rounds which are potentially plausible.

One is a complete global power outage which takes down all systems that rely on electricity.

This would have to include the satellite network as well and if it occurred would be so catastrophic that Bitcoin surviving would be the least of anyone’s concerns.

Another theory is that a code update introduced legitimately to the network that contains a bug or results in an unexpected outcome could crash Bitcoin.

Given the number of people who have to agree on any updates before they’re deployed and the long analysis period before this happens, a bug or any adverse outcome is highly unlikely.

Note we say highly unlikely, but not impossible. The newness of crypto and blockchain technology means there are bound to be a few surprises along the way.

Are smart contracts secure or can they be hacked?

A 51% attack on Bitcoin is a theoretical situation which would arise if a malicious actor where to gain control of 51% or more of the total computing

The world of smart contracts and Decentralised Finance (DeFi) has undergone a Cambrian explosion in recent months.

Smart contracts are being utilised to automate many different areas of traditional business, such as banking and finance.

Already thieves have exploited bugs and flaws in smart contracts and, while may of these situations can later be fixed, a situation could potentially arise where the impact of an exploit is more profound.

Again, there’s a vast community of developers working tirelessly to remove exploit opportunities before they’re discovered by hackers and ensure that the networks are kept up-to-date and upgraded when necessary to keep them secure.

Like blockchain and crypto, the world of smart contracts, DeFi, and Decentralised Autonomous Organisations (DAOs) – organisations that run on rules coded into software where decisions are made without central leadership but rather by a community of invested partners – is set to expand.

This will mean more resources committed to keeping the system safe and secure.

Conclusion

While it’s clear that there are certain unknowns when it comes to the future stability of the Bitcoin blockchain, at present the network is considered extremely secure not least because of its decentralised nature.

Blockchain technology is revolutionising many sectors, especially banking and finance, and there’s a huge ecosystem built around it which is growing daily.

This means that the smartest people in the sector are constantly reviewing and tweaking the technology to ensure it remains secure.

Having a burgeoning developer community working on the technology 24/7 dramatically reduces the opportunity for those with criminal intent to exploit any loopholes that may exist or for mistakes to happen.

The biggest risks to Bitcoin right now are either people stealing it directly from exchanges or holders, or governments introducing draconian regulation which stifle the ability for it to be used more widely used.

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Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice.

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