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Sunday, November 24, 2013

Is Bitcoin Technology Secure?

The Bitcoin value reaches an all-time high of more than $800.  Yet the public wants to know how to use the currency and how secure is the technology?   Bitcoin is an online financial network that people use to send payments from one person to another.  In no way can this technology be compared to credit cards or US currency.  The currency is decentralized which means that no one owns or controls the Bitcoin network.  It has a peer-to-peer structure, with hundreds of computers all over the Internet working together to process Bitcoin transactions.  Bitcoin is not regulated by the government.  So who in their right mind would conduct commercial transactions with the use of Bitcoin?

Bitcoin transactions became mainstream in 2011, and seem to becoming more and more popular.  There are almost 12 million bitcoins in existence, so the Bitcoin "money supply" is now worth around $7 billion.  This technology is highly innovative and attracting to interest of many computer geeks and hobbyist alike.   Why not be in a position where you can produce as much currency as you like especially when there are merchants/consumers that are willing to trade in it?  There are reports of 10,000 merchants accepting Bitcoins in 2013.  Bitcoin has been associated with some illicit activity as well.  Suspected to be used in illegal gambling and drug trafficking.  

Bitcoin Security

There are very few off-line Bitcoin transactions occurring across the country.  Do you really know who you are making the transactions with, and will legal agreements stand up in court?  Bitcoins are stored in wallets online or on a person’s local computer.  The files contain encryption keys, or secret codes that allow you to transfer bitcoins to other people.  Bitcoin technology is a prime target for hackers.  Maybe the best option would be to print out the currency by the use of a paper wallet and store the currency in a safety deposit box.  The best practice would be to store the currency on a computer that is never continuously connected to the Internet.

Read more about Bitcoin Technology


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