Can Bitcoin be hacked?

At the time of writing, it is practically (not theoretically) impossible to hack the cryptography that secures Bitcoin.  The figures are astronomical: If you could process one trillion private keys per second, it would take more than one million times the age of the universe to count them all. Even worse, just enumerating these keys would consume more than the total energy output of the sun for 32 years. This vast keyspace (high-min entropy) plays a fundamental role in securing the Bitcoin network.  When people speak about hacking Bitcoin, the main issue is usually created through poor security on the user end.  For example:

  • A user having poor security of their passphrase for their wallet
  • Poor anti-virus / spyware on device
  • A limited understanding of potential scams by 3rd parties using Bitcoin

What does ‘forking’ a crypto mean?

To understand the ‘forking’ of a cryptocurrency, you must first have a basic understanding of blockchain itself.  If you haven’t, read about blockchain here first.

There are two types of forking, hard forking and soft forking.

First let’s look at hard forking.  When we think about forks, we need to focus on the miners.  Miners follow a specific set of rules that allow them to ‘mine’ bitcoin and receive a reward.  If a miner doesn’t follow the rules set out by the bitcoin protocol, then whatever work they are doing is not valid and not recognised by all the other miners.

Bitcoin can be forked when a proposal is created to change the rules in which it operates.  We can see an example of this with the bitcoin cash fork.  Bitcoin cash creators proposed a larger block size limit (8mb instead of bitcoin’s 1mb).  This meant that at a certain block miners would have to decide which chain they were going to follow, the existing 1mb Bitcoin chain, or by mining to the new rules, follow the new Bitcoin Cash 8mb chain.  Bitcoin cash succeeded in gaining a lot of mining support and thus a successful fork from the main Bitcoin branch occured. However the majority of mining power stayed with the existing Bitcoin blockchain and therefore Bitcoin continued.  Both chains cannot affect each other and their future will depend upon community mining support. What’s good about this is the community decides by way of pointing its mining hash power at what decision it wants to choose.

The alternative to a hard fork is a soft fork. A soft fork occurs when a change is made to the blockchain that is backwards compatible.  In simple terms, this means that a new chain will follow it’s new rules but will also be compatible with all of the old rules. An example of this is ‘segwit’.

Usually a soft fork occurs for small changes to a cryptocurrency and a hard fork for more radical changes.