When it comes to finances, there is one point that’s more important than any other: security.
So before investing in cryptocurrency, we need to know just how secure cryptocurrency is.
Consider this. It took banks decades to develop their security and anti-fraud measures and, during that time, consumers lost almost $1.5 billion due to hacks and other fraudulent activity.The FTC reports that 17,000,000 people had their identity stolen in 2018 alone.
What would a world powered by cryptocurrency look like? Would it be secure?
First, let’s talk about Bitcoin, the world’s most popular cryptocurrency, and how it handles security. They start with a cryptocurrency wallet. In upcoming chapters, I am going to teach you how to set up your first wallet.
This is where you’ll store all the different tokens and coins you invest in. When you create your wallet, you’ll get a public and a private key.
In order to access your wallet, a hacker would need both your public AND private key. Provided you never tell ANYONE what your private key is.. and this is rule #1 of crypto security, here are the steps a hacker would need to take to guess or “brute force” your Bitcoin SHA-256 private key.
To put this in simple terms, there is currently not even enough compute power existing in the world to hack a Bitcoin private key. Let me paint you a fun picture of why we say crypto is secured by math.
First, the hacker would need access to a computer that is so powerful, it has 3x the power of every server Google owns put together.
And Google is estimated to have between 1 Million and 10 Million servers.
One computer with the power of THREE GOOGLES put together. Then, that hacker would need to create FOUR BILLION more of these computers.
At this point, the hacker would not have anywhere near the processing power to discover your private key, even if he ran those computers for the entire lifespan of the discovered universe.
Our hacker decides to get crazy.
He flies an enormous spaceship to four billion earth-sized planets. He then populates every single one of these planets with four billion of his super computers…each.
However, he’s disappointed to learn that even with four billion planets running four billion supercomputers each, he still can’t guess even one private key even if he had 13 billion years to run his computation.
For his final move, he visits four billion galaxies. In each of these galaxies, he gives four billion planets four billion supercomputers. He smiles to himself, satisfied. Because he now has a one in four billion chance of guessing a single private key in the entire lifespan of the discovered universe.
As you can see, although hacking or guessing one private key is mathematically possible, it’s so improbable and difficult that for human purposes, it is impossible.
Now, there have been instances where crypto exchanges have been hacked.
These are places that allow you to exchange one cryptocurrency for another. Security issues here can come from a few sources. Their centralized servers have been compromised, employees leak information, or a bug gets found in their website that allows hackers to gain restricted access to the site.
But banks have also been hacked. And the reason why banks don’t get hacked as often today is that they’ve had decades and billions of dollars to figure out advanced security protocols.
If you look at it this way, you can’t say that fiat is inherently more secure than cryptocurrency. You can only say that the current fiat world has had more time to develop security.
Given the same amount of time, or in reality, considerably less time, crypto exchanges will evolve even better security mechanisms.