Will bitcoin ever be truly secure?

Heather Parry

By Heather Parry

04 April 2014

Bitcoin, the crypto-currency that took the world by storm in 2013, has so far suffered a relatively disastrous 2014.

Last year, the currency’s value skyrocketed from around $500 to $900 in a matter of weeks, leaving much of the world scrambling to invest in a monetary system that seemed to be going from strength to strength. The value of the virtual coins reached a height of $1100 in November 19th, and the number of businesses adopting the currency continued to grow exponentially.

However, in late 2013, the FBI closed down Silk Road, the online black market that traded hard drugs for bitcoin, and seized 144,000 bitcoins worth US$28.5 million. Then, in early 2014, the virtual currency exchange Mt Gox filed for bankruptcy after $477 million dollars of bitcoins were stolen following a system hack. In the moths before and after the MT Gox theft, Sheep Marketplace, Flexconi and Poloniex suffered similar thefts, losing over $100 million dollars of bitcoins combined.

This series of thefts rocked the market and left huge question marks over the security of bitcoin and the “wallet” services that allow users to buy, sell and trade the currency. Another security scare followed soon after, and just this week, names of wallet service Coinbase appeared online, despite that information being supposedly secured.

Coinbase denied that a security breach had occurred, but did admit that a list of its users’ personal information was circulating online. However, the poster of the user data claimed that Coinbase was passing information about its users onto organizations such as the FBI and the IRS. Coinbase neglected to comment on this accusation.

All this and more has led to serious questions being asked about the security of bitcoin as a currency. This is, of course, to be expected when some of the largest bitcoin trading sites lose the sort of money that would leave most huge companies reeling.

But will bitcoin ever be fully protected from this sort of security risk? The most realistic answer is no, it will not. No currency is; thieves can take the bills out of your pocket, the cash out of your bank account, and the debit card from your wallet. However, as bitcoin matures, the security of its wallets will increase. Hackers may always be one step ahead, but bitcoin trading sites won’t be too far behind. 

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