Bit coin uses a well known industry standard cryptography called SHA256 and ECDSA, currently used by banks and credit card companies. Bit coins are stored digitally in a wallet but copying the wallet will not copy your bit coins. Losing the digital wallet or losing access to wallet basically takes all your coins away, and it raises the value of a bit coin. One Bit coin is divisible down to eight decimal places. There are really 2,099,999,997,690,000 (just over 2 quadrillion) maximum possible atomic units in the bit coin design. According to this design only 21 million coins can be mined.
Digital wallets can be hacked or stolen?
Security is one the important issue in all aspects, as cyber crime has just sky rocketed in the last few years, as we all we know, no technology is hack proof. Symantec discovered a Trojan horse that locates the bit coin wallet and email the details to the hacker, by encrypting your digital wallet with a strong password you can protect your wallet even if it’s compromised (read full article here ).
Users can transfer bit coins to anyone and there is no centralized authority to monitor the transactions, this can make bit coins as a medium to buy illegal drugs and weapons online and some people predicts that bit coins will be shut down by the authorities for this reason like flooz and e-gold. Bit coin transactions can be traced and tracked by block-chain data base (Learn more about Block-chain database).
Interested in investing in bit coins?
Gavin Andresen, one of the "core developers", is explicitly advising people "not to make heavy investments in Bitcoins", as it is "kind of like a high risk investment, so we recommend it’s worth giving a try, not to invest.
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