Understanding How Bitcoin Safeguards Anonymity

Bitcoin is best known for its high value, security and the anonymity it provides. If you plan on using Bitcoin to reap these benefits, then it is advisable that you look into the inner workings of Bitcoin. Of particular importance is how Bitcoin safeguards anonymity. Only by understanding how this works, can you figure out the benefits and weaknesses of Bitcoin and how to cover for the shortcomings. This article is a useful guide if you are looking into how Bitcoin safeguards anonymity.

The necessity of Blockchain Technology

When registering for a Bitcoin, you make use of the Bitcoin wallet and a key. Afterward, the address of the Bitcoin wallet becomes the identifier for Bitcoin transactions. Aside from this, there is the Bitcoin blockchain, which is responsible for the security and anonymity afforded to Bitcoin. The blockchain is a real-time public record of Bitcoin transactions. Due to heavy encryption, it would be unrealistic to try and hack into the blockchain especially considering the time and resources that would be needed. More so, blockchain is not owned by anyone, meaning that no one can use up the records for personal gains, such as in identifying the users.

What's more is that blockchain does not exist anywhere physically, making it impossible to extract records from the system. Thanks to these and other designs of the blockchain, Bitcoin is private and secure. However, the level of security offered is not absolute, and there are weaknesses in Bitcoin security.

Problems with Bitcoin security

One of the major shortcomings in Bitcoin security lies in the user’s account. Bitcoin accounts are provided by independent security, so their security is not tied to the blockchain. As such, hackers often target companies that have inadequate security measures to gain access to Bitcoin wallets through the company. However, the most common target is the users since usually, they have fewer cybersecurity measures in place. The bigger issue is that once you lose the key to your Bitcoin wallet, you permanently lose access to your account. Because you don’t use your personal information to register for an account, you cannot prove ownership of the account. 

Also, if the Bitcoin in your account is transferred elsewhere, you cannot get it back since Bitcoin lacks official channels where you can report and follow up on the theft. What must you do to avoid such unfortunate eventualities?

Ways to fortify Bitcoin security

●       Protect your key

Your key is the most important thing when it comes to Bitcoin security. Without a key, a hacker’s efforts are futile, unless there’s a backdoor to the Bitcoin wallet. You should not keep a physical record of the key on you, such as writing it down on a note and sticking carrying it with you. If you have a digital record, you should consider using an encrypted folder for better protection. Ideally, you should install a password manager and use it to store your key.

●       Make use of cybersecurity measures

While the blockchain protects against direct hacking, it is useless against indirect hacking. By targeting your device or network, hackers can easily gain access to your device and find ways to acquire your Bitcoin key. By this point, your identity would already have been exposed, which defeats the purpose. By taking cybersecurity measures, you avoid such an eventuality.

The first step should be network security since each time you connect online you leak sensitive information such as your IP address. Moreover, hacking into your network could provide access to your device where malware can then be implanted. Installing a VPN for Bitcoin security should help solve this problem since it encrypts your network and hides your IP address. Additionally, you should install an antivirus to protect against malware.

The Takeaway

Bitcoin is an ideal finance option for those concerned about financial security. However, even with its security, there are still weaknesses that you need to look into. By covering these weaknesses using multiple security measures, you improve the privacy and security of Bitcoin.