Blockchain and cryptocurrency has taken the world by storm.
Businesses, governments and institutions use both to facilitate the delivery of money remittances, health services, and smart contracts.
Even private enterprises are capitalizing on this technology to enjoy cheaper payments and greater access to finance. However, the one question that diminishes the scope of its use is — does blockchain offer security?
Can blockchain assure that the transactions done through it would be tamper-free and private?
Basics of Blockchain
To answer this question on blockchain security, you must first understand the basics of the blockchain technology.
As the name itself implies, blockchain consists of a chain of “digital blocks” containing transaction records. Every block on the chain links to the blocks after and before it. This interlinking of the blocks makes it tough for anyone to disturb a single record block. This is because one would need to change not just that block, but even the ones linked to it to prevent detection.
Additionally, what improves blockchain security is the technology of cryptography. The participants on the network receive their personal private keys that are specific for each transaction and function as a personal digital signature.
This signature becomes invalid as soon as a hacker alters a record/block. Moreover, everyone on the peer-to-peer network gets to know that something is amiss. This monitoring by everyone on the network makes blockchain a decentralized technology. Moreover, it ensures that all the information is not present in a single location, and no one can alter it from one single computer.
In the scenario that one wishes to alter a certain majority of blockchain, it would demand colossal amounts of computing power. This phenomenon has resulted in a lot of debate and questions regarding the security of the smaller blockchain. No conclusion has been drawn out still yet, but has established one fact. It is for sure that bigger the networks, more chance of tamper-resistance than the smaller ones.
Public and Private Blockchain
The form of blockchain network which allows every user on the network to get details of the transactions is a public blockchain. Famous cryptocurrencies like Bitcoin depend on the public blockchain. Every computer on such a network (node) can publish the transactions on the network by solving a complex cryptographic puzzle. This process that allows a network of nodes to confirm older transactions and newer transactions is known as consensus protocol. Whichever user solves the puzzle first in the bitcoin network gets a reward, by the process called as mining.
In contrast to the above mentioned decentralized process, companies mostly use what is known as private blockchain. Unlike public blockchain where anyone can join the network, private ones only allow known organizations to form a ‘business network”. This privacy allows them to confirm each individual member on the network and who all have access privileges.
Moreover, contrary to the consensus protocol which the algorithm uses for for verifying transactions in a public network, private ones use a process of achieving consensus through a step known as “selective endorsement. Even though a private network allows the businesses to screen members with access rights and permissions, there can still be issues that emerge due to the threat from the insiders. To prevent such issues from arising, it is vital for the network architecture of the private blockchain to be robust and excessively secure.
What Improves Private Blockchain Security?
The platform on which a company deploys their private blockchain majorly influences its security features. There are possibilities for people with ill intentions to exploit the vulnerabilities in the network infrastructure. To avoid such a scenario, one should integrate security features in the infrastructure that:
- Prevents root users, administrators and anyone else from being able to access sensitive information.
- Ensure to properly safeguard the encryption keys using the most superior security features so that no one can misappropriate them.
- Prevents acceptances of any attempts to alter the applications or data within the network.
Is There No Way To Circumvent Blockchain Security?
The most ingenious hackers have come with a way that provides a negative answer to the question of blockchain security.
For instance, Emin Gün Sirer with his colleagues at the Cornell University demonstrated methods to cause blockchain subversion with almost half mining power as compared to other miners. This process would involve a “selfish miner” who fools the other nodes and waste their time in completing an already resolved crypto-puzzle, thus, gaining an unfair advantage.
Another possibility is to create an eclipse attack.
Such an attack would involve a hacker controlling one of the nodes in the network and fool it to accept false data coming which appears as if coming from the other nodes of the network. Such a node could end up confirming false transactions.
The biggest areas which challenges blockchain security are the points where the blockchain systems link with the actual world-such as the third-party applications and software clients.
One such touch-point are smart contracts, which are actually computer programs written in blockchain for automating transactions. In 2016, some hackers exploited an unforeseen quirk that was present in a smart contract developed on Ethereum’s blockchain and used to steal 3.6 million ether, which at that time was worth around $80 million.
Even though blockchain is promising and robust, it is still a technology.
And granted, every technology has certain attack vectors and weak points that make it vulnerable. However, the good news is that most of the threats that have been line against blockchain are mostly theoretical and very few have happened in the real world.
The real threat to this technology comes from users and not hackers.
So, remember to keep your security key private and don’t share transaction details with other. Follow careful steps and you can count blockchain as one of the safest technology present now.
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