The Safety of Bitcoin

Bitcoin has gained in popularity in the last year.  In December 2017, the digital currency hit a  record high, with a single Bitcoin valued just under $20,000[1].  And around the world, markets are moving to officially trade in Bitcoin and accept it as payment for everyday goods and services.  But even as Bitcoin becomes widely accepted, the question remains – is it safe?  Thanks to the use of a safe cryptocurrency wallet, the answer is a resounding yes.

Quelling fears about Bitcoin

Bitcoin skeptics point to the currency’s lack of regulation as a concern.  When you pay for a product or service with cash or a credit card, or even a payment app, there are laws and regulations in place to protect you.  They don’t guarantee that you’ll never be scammed, but they provide protection.  You can shop knowing that your transactions are secure, and in the case that they aren’t, you can probably recover your lost funds.

On the other hand, Bitcoin was designed to operate free of regulation[2].  It was created to build a decentralized banking system that put financial power back into the hands of the consumer.  The lack of regulation was viewed as a positive, not a point of trepidation.

Yes, Bitcoin operates outside of traditional federal regulation, but that doesn’t make it unsafe.  In fact, blockchain technology ensures this decentralized banking system is one of the safest ways to spend.

With blockchain[3], transaction information is automatically recorded and stored in a block, and each transaction must be verified.  The beauty of blockchain is that its information is not subject to human error – it’s all facilitated by computer systems. So, if a seller or vendor has engaged in fraudulent activity, that information is stored indefinitely in a block, and buyers can access that data at any time.  There’s more transparency, and buyers can make more conscious decisions about how and where to spend their money.

The safe cryptocurrency wallet

Aside from the transparency and protection of blockchain technology, Bitcoin is stored in a safe cryptocurrency wallet[4].  These wallets are user-friendly, mobile, convenient, and backed by a track record of excellence in security.  They can be backed up and protected – in the event of computer malfunctions or failures.  Each safe cryptocurrency wallet can also be encrypted to prevent unauthorized access.

Buyers can even use offline wallets, or cold storage, to ensure their funds are only accessible when they’re needed.  And multi-signature protection can be instituted, so no single person can authorize transactions without the approval of all required users.

In the event that you’ve enlisted a third-party OTC Bitcoin escrow service, it’s important to investigate how your coins are stored. A sampling of 4 prominent Bitcoin escrow services reveals just how inconsistent the industry is:

  • BTC-Asia: Its escrow service mentions secure storage as part of the process but doesn’t outline specifics.
  • BitRated: Though it’s technically considered an escrow service, it doesn’t actually hold coins in escrow. Instead, it relies heavily on multi-signature agreements and an internal vetting process for buyers and sellers.
  • Bitify: This marketplace and auction site’s escrow service keeps coins in an account for 30 days, but does not use secure wallets.
  • Anaiv Capital: This firm stores all coins in a secure Escrow wallet that’s kept in cold storage.

In this sampling, Anaiv Capital is the only firm that both utilizes a secure wallet and clearly outlines its storage standards.  It’s important to look for this type of storage info when selecting a third-party to handle your funds.

And, speaking generally about digital wallets[5], they are safer than physical wallets.  As major banks and financial institutions utilize digital payments for credit cards and cash, there’s clear proof that digital currency in any form is not only safe but also the new norm.

Rest assured, Bitcoin is a safe currency as long as you properly utilize the security tools and information available to you.

 

References

[1] Morris, David Z. (2017, December 17). Bitcoin Hits a New Record High, But Stops Short of $20,000. Retrieved from: fortune.com.

[2] Gould, Mark. (2017, March 27). Is Bitcoin A Safe Way To Transact Money? Retrieved from: forbes.com.

[3] Fortney, Lucas. (2018, December 10). Blockchain, Explained. Retrieved from: Investopedia.com.

[4] Securing your wallet. Retrieved from: bitcoin.org.

[5] Dickler, Jessie. (2018, March 3). Digital wallets are safe, yet Americans remain wary. Retrieved from: cnbc.com.