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Bitcoin Scams And Vulnerabilities To Understand And Take Protective Steps

Bitcoin is a digital currency and for its protection, you will need to gain digital awareness. Bitcoin prices are increasing every day and several other benefits have led to its popularity. It is a great alternative for payment that offers international payments at a significantly low cost.

The transactions have no interference from banks or government as it is decentralized, so users gain anonymity and privacy. Another characteristic associated with BTC is its resistance to inflation, confiscation, and censorship.

The beneficial attributes of Bitcoin have offered it spectacular acceptability, which has caused traders, investors, and casino players to take more interest in using it as an alternative payment method. You can choose crypto casinos that offer players to make a deposit or withdrawal using Bitcoins. Bitone Core is a review website, where you will find a list of reliable platforms that offer appealing bonuses and features. As the price of bitcoin is arising and is speculated to increase and touch $10,000 per dollar it also invites malicious-minded people.

Bitcoin is virtual money that occurs between two computers, which is known as PTP [Peer-to-peer] transactions. There is no need for bank accounts but a mobile phone/desktop, WiFi, and open-source software called Wallet. It generates the bitcoin address [just like an email address]. You share this wallet address with the party you transact with. In an email, you use a single address but in cryptocurrency, each transaction will need a new address. The wallet helps to produce more addresses.

Every transaction is stored in a block or digital diary, which is unhackable. The block cluster is called blockchain, which is shared with network nodes. Nodes are computers and after transaction confirmation, no one can change the record once entered in the digital diary. Hash Value and Cryptography are used to transform the ledger into an editable format. However, there are some vulnerabilities and scams that occurred.

DDoS Attacks

The majority of bitcoin users use old software, which allows hackers to attack through DDoS [Distributed Denial of Service]. DDoS slows network machines, which delays purchase transactions. Mt. Gox lost Bitcoins worth $ 450 million but how the DDoS attack happened is still not established.

How to avoid –

  • Keep your operating system and software upgraded to the latest version. Install reliable and latest antivirus software. Ensure to use every upgraded security patch to block malware entry.
  • Validate every visitor on your mobile device or PC that is used to store the bitcoin keys. Never open strange links because they can inject your computer with malware.
  • Make use of https:// on the entire website for extra security.
  • Never allow everyone to use the admin pages as they can misuse the machine.
  • Purchase WAF [web-based firewall], which protects your software from every kind of DDoS attack.

Selfish mining attack

Mining is a complicated computational math problem. Special high computation power machines are needed to solve the problem. It also needs special skills. The cryptocurrency landscape has its share of bad [dishonest] users trying to gain more bitcoins.

These unethical miners form a group and conspire against innocent miners. The successfully generated blocks are withheld from broadcasting and the bad ones take the chance to create a private block chain on this new block, while the other miners work on the previously existing block.

How to avoid-

  • Selfish miners withhold the successful block forcing the chances of an honest miner’s chance to earn bitcoins to go to waste. These selfish miners are sophisticated programmers and as blockchain technology is not regulated they get a chance to do malicious activities without the concerns of getting identified.
  • Experts have recommended some solutions like introducing a penalty for censorship of the blocks.
  • In a Zeroblock solution, if the selfish node is squashing a block more than the scheduled expected time that the honest miner’s node calculates, the selfish miner’s block will be terminated and disallowed by honest miner’s nodes.
  • Researchers are still working on different proposals to make block technology free from selfish miners.

Wallet vulnerability

The wallet uses a private and public key. The latter generates addresses, while the former allows gaining access. The wallet can be stored on mobile phones, computers, or a reliable online platform. If the seed is exposed the wallet can be compromised. This can be achieved through hardware hacking, phishing email, fake wallet, Trojan attack, installing a keylogger, etc.

How to avoid-

  • Purchase hardware from reliable suppliers. It is sensible to buy directly from manufacturers. Before using, keep security measures in mind.
  • Store USB sticks away from internet exposure. Use it only when needed.
  • Store the wallet address on the computer patched properly with the latest version of antivirus and OS. Keep it away from a consistent online presence. It is called ‘cold storage’ and the risk is significantly reduced.
  • Use updated antivirus and firewall equipped with web filtering, intrusion prevention, and malware detectors. Install password manager and never download a strange program or open unknown emails.

To avoid bitcoin scams, you need to recognize the vulnerabilities and have a strategy for risk mitigation and protection. Even if there is no fool-proof protection for fiat or digital currencies, you need to take every preventive measure to lessen the chances of getting scammed.

Big spender vulnerability

Remember, scammers and thieves, go where there is cash. The skyrocketing prices of bitcoin have made big spenders vulnerable to hacking. The attacker covertly cancels the transaction without the user’s knowledge as the cancellation cost is too low. As the user’s balance shows incoming transactions increase he/she mistakenly believes that the pending deal is confirmed.

Replacement by Fee [RFB] feature allows the attacker to send BTC with the low transaction and send the same BTC with high transaction fees, which gets confirmed. Thus the transaction is replaced. The user is confused about this kind of fraud. All the bitcoins in the user’s wallet are not stolen.

The many advantages of bitcoins like anonymity, easy cross-border payment, no regulations, low transaction fees, and encryption have given a push to the value of bitcoin. This in turn has increased the chances of bitcoin getting stolen from your wallet or directly during a transaction.

The Crypto community is taking steps to identify the loopholes and patch them for better protection.