Bitcoin and Blockchain - How safe are they for online transactions?
Even though most people do not even know what they are, Bitcoins increased in value from about $570 to more than $4,300 an astounding 750 per cent for the first time since it came to existence in 2009. The very design features that make bitcoin technology appealing to its users are also weaknesses being exploited for the theft of the cryptocurrency.
The blockchain is the main technological innovation of bitcoin and it is decentralized, pseudo-anonymous and unregulated and therefore attractive to many of its users. It allows a transaction to take place between two parties anonymously, if one ignores the digital signature, without a mediator. In the case of traditional currencies a bank or a financial institution acts as a ‘trusted’ mediator. Blockchain with its open ledger design, is seen by some investors as a cost-intensive, fast, and transparent technology.
The irreversible nature of transactions for bitcoins can lead to bitcoins that are stolen or diverted to another wallet, due to hacking or dishonest trading partners cannot be reversed and recovered.
They have no inherent value, because they are a currency which represents value rather than having value themselves. The Bitcoin currency is not managed by any government agency, nor is it backed by any government. Bitcoin values are purely dependent upon holders having faith they will continue to have value.
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