Blockchain technology is considered to be one of the best methods of ensuring secure transactions. Its most popular application has been in the world of cryptocurrency. It has been increasingly adopted by businesses and members of the general public alike due to the level of security and controlled access it provides. Except for finance, it has also found applications in the healthcare industry and gaming industry as well.
This technology is set to revolutionize the way we handle transactions all over the world. As a result, it is important to understand exactly how the technology works and how it provides better security than its traditional counterparts.
Security by the blocks
A blockchain is basically and as the name suggests, a link of chains called digital ‘blocks’ that contain records of information or transactions. Each block is linked to all the blocks that come before and after it. This ensures that it is extremely difficult to change or tamper with a single record as hackers would have to change the record in all blocks as well to avoid detection. On its own, this does not seem like much of deterrence but blockchain technology also has certain additional elements that provide additional facets of security.
The records stored on blockchains are secured using cryptography. Participants receive their own private keys that have been assigned to their transactions and work similarly to a personal digital signature. If records are changed or tampered with, the signature becomes invalid. This alerts peer networks immediately about discrepancies in that particular blockchain. This form of early notification prevents further damage and is crucial in maintaining the overall safety of a blockchain network.
As blockchains are not stored in a central location, they do not have a single point of failure and they can’t be altered from one single computer. Accessing every iteration of blockchain and modify them would require tremendous computing power all accessing each instance of the blockchain simultaneously.
All blockchains are not created equal
It is crucial to evaluate whether the type of technology that you are considering is adequate for your security concern. When it comes to blockchain, there are two main types to consider: public and private. They differ in a few key elements regarding the level of security they provide.
Public blockchains rely on computers connected to public networks. They utilize the network to validate transactions and then create a bundle of blocks to add to the ledger. Any computer connected to the internet can gain access to these bundles. Private blockchains, however, usually only allow authorized organizations to have access. This creates a business network that is private and only accessible by authorized members. The difference is significant as it allows businesses to regulate access to confidential information. Another important difference is that public blockchains allow for anonymity while private blockchains require identity to authorize membership and access privileges.
After key differences between public and private blockchain is how they verify transactions. For a transaction to be verified on the blockchain, network participants are required to agree that it is the one and only version of the truth. Bitcoin is probably the most popular example of a public blockchain and it achieves verification through mining.
Private blockchains, however, work on a permissioned network in which verification is conducted using a process called a selective endorsement. Transactions made by these selective endorsements need to be verified by known users. This gives businesses the advantage that only users with the correct access and authorization can maintain the ledger. The drawback of a private blockchain is that it is still vulnerable to threats from insiders, but these can be resolved by having secure infrastructure.
A blockchain network is only as secure as its infrastructure
While developing a private blockchain it is key to decide the best platform used for deployment.
Although blockchain has integral properties that ensure security, vulnerabilities within the infrastructure can still be exploited. The best solution is to have integrated security within an infrastructure that is capable of:
- Prevent anyone — even root users and administrators — from accessing sensitive information
- Deny illicit attempts to change data or applications within the network.
- Carefully guard encryption keys using the highest-grade security standards so they can never be misappropriated.
Such capabilities ensure that blockchain networks have additional protection to prevent attacks.