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Can Bitcoin be stolen?

The fact of the matter is that Bitcoin is incredibly secure, and ordinary people can protect their assets without much effort. The real problem is that not everyone understands how Bitcoin works, and this often leads people to take actions that lead to coin theft. Most ordinary investors buy and store bitcoins using services like Coinbase. This is a reasonable option, since these services rely on security features built into Bitcoin.

The other option is to get yourself a bitcoin wallet. This entails tracking two lines of keyboard characters known as the public key and private key. The public key is essentially a safe where you can store bitcoins. The private key is the secret code that opens the safe, hence only you should know it.

Bitcoin is designed so that, in principle, it is impossible to guess the private key, which means that no one can break into your wallet / safe. This also suggests that the only way in which Bitcoin can be stolen is to have the thief deceive you or to have the third party you rely on to grant someone access to the wallet.

Here are a few ways this can happen:

1. Hackers depict themselves as Bitcoin recipients

How it happens: There were quite a few instances in the last couple of years when companies conducted an ICO and asked investors to pay with Bitcoins. In some cases, hackers presented themselves as organizing companies by using fake websites and urged investors to send millions of dollars in Bitcoins to a fake wallet. Transactions are non-reversible, hence, the money was not going to be returned.

How to prevent it: Always double check the address of the wallet is genuine and correct.

2. The hacker gets your password from your account via the storage and/or exchange service

How it happens: If you use a service like Coinbase, you do not need to worry about remembering the public and private keys, since you use a username (usually an email address) and a basic password. Hackers can crack a client’s email account, and then ask Coinbase (or any other service you use) to reset the password. The reset instructions are sent to your hacked email account, which allows the thief to gain access to the bitcoins.

How to prevent it: Protect your email account with two-factor authentication to prevent attacks, and do the same with your bitcoin storage service.

3. You reveal your private key yourself

How it happens: This risk exists only if you yourself manage your wallet. Someone can get your key by logging into your email (if you keep the private key in it), or you can accidentally show it to someone from your real-life environment.

How to prevent it: Store the secret key on a piece of paper or on a USB drive and keep it in a safe place such as a safe.

4. You trust a fraudulent company

How it happens: A company offers services related to bitcoins. An exchange and/or market where customers have bitcoin accounts. Next thing you know, the company has disappeared, with possible claims that it was hacked. What is a lot more likely is that the company has escaped with your assets and you will not be seeing them again.

How to prevent it: This type of fraud is often associated with the darker corners of the Internet and with one-day firms that are sketchy when you start looking into them.

5. You work with an unreliable third party

How it happens: The $64 million NiceHash theft seems to have occurred because hackers hacked an employee’s laptop and got access to the company’s payment services. Hackers got access to one of the wallets where funds belonging to NiceHash customers were located and emptied it. Bitcoin owners often do business with companies that are not adequately protected in terms of cybersecurity. Then they wonder how someone could steal their bitcoins.

How to prevent it: be careful when choosing Bitcoin companies with whom you decide to do business.