Can Bitcoin Be Hacked?

Some of the concerns people have about Bitcoin are: How secure is it? Can it be hacked? Who guarantees the safety of this digital property since there is no company or entity responsible for Bitcoin? These are valid questions, especially since most people don’t and will not understand the complexities of cryptography and blockchain technology, and frankly, they shouldn’t need to! Simply put, Bitcoin security comes from two things, its incentive structure, and the design of its consensus mechanism, Proof of Work (PoW)

For Bitcoin’s ledger to be manipulated, a hacker would need to control at least one-third of the mining hardware. But as the miner’s reward is paid out in bitcoin, it is in their best interest to secure the network and increase the value of bitcoin rather than attack the network and lead to a devaluation of their bitcoin. Thereby aligning incentives to strengthen the network rather than attempting to compromise it.

The second reason bitcoin is secure is due to its consensus mechanism. As mentioned in our Proof of Work (PoW) blog post, Bitcoin mining requires a significant amount of energy. The fact that PoW is “costly” is a feature, not a bug. The energy expended acts as a barrier that protects the public ledger. The creation of new bitcoins is just a side effect. 

Before the digital age, securing something meant building a thick wall around whatever was deemed valuable. In the digital world, protecting value requires designing a mechanism that makes it more profitable to strengthen the “wall” rather than “break it.” Bitcoin’s public ledger is secured by its collective hashing power: the sum of all energy expended to do the work in its proof-of-work chain.

In summary, we can think of Bitcoin’s energy usage as a giant digital wall, which secures all bitcoin balances of all users, now, and in the future.