What is Blockchain Security: Complete Guide
By design, blockchain technology is very safe. Blockchain networks should have strong encryption as the technology platform behind digital currencies, but there’s more to the data security story in blockchain than that.
Is it safe to use blockchain?
Blockchains keep track of many records of transactions and other data. Several layers of security protect these records. Because of this, most people think these systems are safe and secure.
A #blockchain is a digital list of transactions kept up-to-date by a network of computers spread out worldwide. It’s easy to read the ledger and add more information to the chain of transactions, but each new trade has to pass through several #security checks before it can be added to the blockchain. No one can change or delete data that is already there. If someone tries to change the ledger, it’s easy to find out who did it, and that person usually loses access to the #network.
Why is blockchain security so secure?
Minting” a new block of data is the process of adding recent transactions to a blockchain. There are a few things that all block-mining systems have in common:
There is a different address for each block.
- Each new block has a link to the #block before it. This step makes a chain of data blocks that goes back to the first block of each blockchain.
- The link is protected using data encryption and a new transaction-validating data set. This feature ensures that the correct link to the previous block is set in stone and can’t be changed.
- Each new block must be confirmed by a certain number of #validation nodes agreeing and creating a new token to go with the new block.
Beyond these basic ideas, there are many ways for blockchains to do their minting jobs. The first system was called “proof of work.”
In this system, new data blocks are made through “mining.” Many computers and unique mining systems solve challenging math puzzles to earn the right to issue the next data block.
At this point, Bitcoin (CRYPTO: BTC), the first #cryptocurrency and blockchain system, was built, and it is still in use today. Critics say this method wastes a lot of computing power and electricity, while supporters like that a brute-force attack on this system would require a lot of #mining hardware that most people don’t have.
Proof of stake is another well-known way to make new blocks. Here, people who already own digital tokens on the blockchain verify transactions and add them to data blocks. In this system, the people who check the #data must decide whether or not to put their tokens on the validation system. You can’t sell, burn, or give away tokens used in this way. Instead, you get new data blocks as rewards. You have a better chance of getting the next minting reward if you stake more tokens.
This method is easier on the #environment, but critics point out that large token holders can have too much control over this kind of blockchain network. Suppose you see blockchain technologies and digital currencies as a disruptive alternative to traditional financial institutions and payment systems.
In that case, proof-of-stake blockchains can offer a different promise of truly decentralized operations. Central control is a single point of failure, which means that bad people can attack it more easily.
How safe is it to use blockchain?
No data platform or financial system is entirely safe, and blockchain is no different. Blockchains can be broken into parts. It’s just tough to get through them.
There are only two ways to break the security of a blockchain system already in place. Both require a lot of computing power (in the case of proof-of-work blockchains) or a lot of tokens already in circulation (for proof-of-stake systems).
The first type of attack is called a 51% attack. Most blockchains use a simple majority to run their networks. If you control over half of all verification nodes, you can add fake data, spend cryptocurrency coins twice, and do other bad things. Again, there is safety in numbers, and this attack is nearly impossible to pull off on networks as big as Bitcoin or Ethereum (CRYPTO: ETH), but new altcoins may be small enough to fall victim to this method.
If there are bugs in the system’s code that manages the blockchain, anyone can add wrong data blocks in other ways. As usual, the older and bigger networks are almost immune because they have been open to the public for a long time and have avoided or stopped every kind of bug-exploiting attack.
Future code updates could add new bugs to the system. Still, thousands of operators are reviewing these updates with a vested interest in ensuring the system works correctly and securely. They will only take effect once most node operators instal and run the faulty code. Again, this is an area where newer blockchains have more trouble, but they can also learn from the mistakes made by attacks on the big blockchains.
Digital wallets and digital asset trading exchanges have indeed been hacked in the past, but that’s a different problem. Accounts for cryptocurrencies can be hacked because of inadequate security, human error, or a lack of money for cybersecurity. Investors should pay attention to how secure each trading and storage platform is known to be.
How are public and private blockchains different?
Blockchain-ledger systems can be kept on a private network with tight control. They can also run on the open internet because they have more than one layer of security for their data. Most of the blockchains and digital assets you hear about daily are public, but many technology companies are happy to set up private blockchain networks for you if that’s what you need.
Anyone can join a public blockchain. In a blockchain network, there are no limits on who can run data nodes, process validations, store copies of the whole ledger, or play other roles. This feature is a true decentralized network.
A private blockchain goes against the idea of decentralized management by locking down access to nodes with passwords, two-factor authentication, and other tools for user management.
In the most extreme cases, the blockchain may only run inside the private network infrastructure of a single company or organization, relying on firewalls and secure data centers to keep all blockchain data under tight control.
There are two sides to it. A public blockchain’s security is based on the idea that there is safety in numbers. On the other hand, a private network drops this idea in favor of a central authority. This feature would make sense if the blockchain in question were made to serve a private purpose that no one outside of that organization could see or change. Most of the time, though, a decentralized system is safer.
Blockchain security Use Cases
We can use blockchain networks for more than just digital currencies and well-known decentralized financial applications. They can also protect other sensitive data stores where security is a must.
Blockchain is used in Security Applications.
Blockchain ledgers can protect transactions, measured data, personal information, or business secrets. Each of these data streams would use a very different blockchain.
A mobile app could handle payments like a regular credit card using a public blockchain for financial data. An Internet of Things (IoT) device can collect data locally, pre-process it into a smaller package of data ready for deeper analysis in a data center somewhere, and then use a smart contract blockchain similar to Ethereum to send that package and maybe act on the results.
Blockchain for Data Protection
A blockchain network could handle personal information like Social Security records, driver’s licenses, and job histories. It will be up to the voters and the government to decide how public or private this network should be and whether it should run a private solution for personal data.
Healthcare security belongs in the same conversation, and we still need to learn how comfortable we are with making medical records available on a digital network that can reach people all over the world, even if the data itself is safe and protected by the usual security protocols.
These are just a few ways blockchain systems can protect data and keep computers safe. There will be more as more inventors, and businesspeople use their skills in the blockchain space. We have just discovered what these data ledgers that can’t be changed can do.
About the Author:
JumboBlockchain is the layer 1 blockchain protocol with three patents applied.
Follow us at
Linktree: https://linktr.ee/Jumbochain
