One thing people seem to be confused about is what will happen if someone loses their Bitcoin balance due to a theft. Keeping in mind how the digital currency is not an official currency, it is always possible to file a report with one’s local police department. But whether or not they will investigate the matter, remains to be seen. Proving ownership of stolen coins is not all that hard, but the technical aspects are a mystery to law enforcement in most regions.
Also read: Princeton University Releases First Draft of Book on Cryptocurrency Technologies
Bitcoin Theft Is A Crime
First and foremost, stealing someone else’s Bitcoin balance is an obvious theft. You take money that doesn’t belong to you by any means and defraud another person in this world. Even though many people assume Bitcoin is anonymous, it is rather easy to see where the funds are being transferred to.
Granted, there is no direct link between somebody’s identity and their Bitcoin wallet address, but that doesn’t make the popular digital currency anonymous all of a sudden. The main issue arises when people want to recoup their stolen funds, as Bitcoin transactions can not be reversed or disputed. In fact, the only way to get the funds back is if the thief decides to refund the money out of goodwill.
Filing a report with the police will not do much good either, as they are not inclined to investigate the matter for tiny amounts. Due to a lack of understanding of how Bitcoin works, there is no incentive for law enforcement to help out citizens when their digital currency is stolen, even when it is a clear case of theft.
This is one of the reasons why it is so important to keep in mind that, when dealing with bitcoins, the end user is in full control of the funds. That also means they bear the sole responsibility for any wrongdoings or theft. The Bitcoin protocol on its own is incredibly secure, but the end user is responsible for taking the necessary security precautions.
For those users storing their bitcoins on a mobile device, adding a password to the wallet is an absolute must. Or even better, using an old phone to set up as cold wallet storage might be a better idea. Doing so will keep the coins safe even if something were to happen with your current phone, although nearly every wallet provider will let users recover their balance on a different device by using the mnemonic seed.
Computer users, on the other hand, can protect their Bitcoin software with a strong password, and install antivirus software, as well as malware protection. For those who want to take their security to the next level, investing in a separate device such as a Ledger or TREZOR might well be worth the effort.
Would you like to see us do more thorough guides on how to protect your Bitcoin balance? Let us know in the comments below!
Partial source; Reddit
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