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Blockchain Security and Privacy: Hype or Hope?

With the rapid rise in innovation, businesses are on their toes to embrace digital transformation. But it seems like the more new tech trends emerge, the more threats and holes arise. And let’s be honest, if security fails, nothing else will succeed. So, don’t you ever start the digital revolution without making cybersecurity a top priority. It’s most definitely time for a major rethink about the data we produce, collect and store. The software world plagued with a multitude of gaps and vulnerabilities can’t help but wonder: could blockchain security stop cybercrooks in their tracks?

World-shaking security disasters

Blockchain SecurityCyberattacks and exploits have become disturbingly common. These past couple of years have been disastrous for online security. Yahoo, eBay, Equifax, Facebook… it’s hard to even count all the victims who fell prey to cybercrime, data fraud or theft. Just think about the whole lot of money lost to hackers, and what’s worse – how devastating those breaches have been to hard-earned reputations.

We also have a lot to learn about the risks of our digital presence. Nothing is as secure on the web as we believe it is. People, unaware that their privacy is at stake, move more of their lives online, all for the sake of comments, likes and shares. The truth is, hundreds of millions of profiles are up for grabs by hackers and in a constant state of compromise. The Cambridge Analytica scandal which exposed the personal information of millions of users, have demonstrated the dangers of oversharing data on social media and the lack of control over who gets to keep it.

The drumbeat of high-profile leaks in recent years has brought the issue of data protection back into the spotlight. It has become abundantly clear that holding on to the old password approach will only provide a recipe for a disaster. The world is waking up to the awareness that the moment you go online, you may become a target for bad players. Companies are rightfully concerned about protecting their data and looking for viable solutions that could fill the security gap. An airtight alternative to existing security systems will require a fundamental shift in information handling and storage – and blockchain technology could just do the job.

New kid on the block

Even though the blockchain concept has been around for almost a decade now, it was not until recently that it became a new favorite for data security pros. The blockchain market is rapidly trending upward and is expected to grow from over $400 million in 2017 to an eye-watering $7.6 billion by 2022. But as with any technology, it’s only as valuable as it is secure. Cybercriminals are working day and night to undermine blockchain security – and yet it stands like a rock.

Essential building blocks of blockchain security

Blockchain Security

Decentralization

No centralized database is, in fact, impenetrable. Blockchain is a shared electronic ledger that moves data storage to an entirely decentralized model, and this is what effectively makes Blockchain hack proof. Because blockchains are distributed and not held on a single server, falsifying the ledger would require seizing massive amounts of computing power. To alter a chain, you need to take control of at least 51% of computers on the network (if not more) and change records all at the same time. A hard nut to crack, don’t you think?

Security by the blocks

Blockchain technology creates a linear series of ‘blocks’ of code that contain records of transactions. Each block is time-stamped and linked to the previous one. Later entries must always reference earlier ones, so anyone trying to tamper with a single record, would also need to change all preceding blocks. What a painfully laborious and wildly impractical thing to do!

Encryption

Constant-growth record lists are secured through cutting-edge cryptography and so, are extremely difficult to decrypt. Because of all the sophisticated math and innovative software rules of blockchain, it would literally take an insanely smart hacker to crack the code. Network participants use private keys that act as a personal digital signature. If a record gets changed, the signature immediately becomes invalid and the network is notified of an attempted breach.

Consensus mechanisms

One of the keys to blockchain security is that the data is continually verified, updated and kept in sync through the consensus of all participants. Any changes to the database are sent to all users, and no new transaction can be approved and stored in the blockchain unless a majority agrees that it is valid. With each member having their own copy of the data, the ledger remains safe and intact, even if some of the users have been compromised.

Privacy protection

Blockchain technology removes the need for powerful central forces and instead puts the power of data back into the hands of those whom it belongs, the common folks. It could also help us strengthen our privacy. Ensuring anonymity, protecting users from being robbed and helping them to track a misuse of their data – these are just a few out of many privacy challenges that blockchain offers solutions for.

What about blockchain security risks?

Blockchain Security
Just as in life, it’s not always only good news about blockchain security. Because cryptos have become so lucrative, this past year we’ve seen tremendous potential for blockchain security risks that could hinder the growth and adoption of the technology. Many Bitcoin exchanges have been hacked and shut down. Some major blockchain hacks that resulted in the theft of millions of dollars in Ethereum have raised eyebrows. As it turns out, even the most secure of systems can fail where skilled cheaters are at work.

Hackers are hunting for processing power to “mine” for coins (aka crypto-jacking) and target large enterprises with big computational energy. On the other hand, small blockchains or those at the early stages of growth tend to be especially vulnerable to attacks. If threat actors get control of 51% of nodes (computers) on the system, they can ruin the integrity of the network. On a scale of thousands or millions of machines, blockchain hacks seem most improbable. But if you’ve just launched a new cryptocurrency with only a dozen or two of nodes, the odds are against you. Long story short, the bigger your network is, the more resistant your blockchain will be.

Protecting cryptographic keys is another essential ingredient to blockchain security. If everything is encrypted, you run the risk of losing it all if the key is lost. Using hardware security modules and trusted computers instead of digital wallets may well provide protection for users’ digital assets.

Blockchain is a melting pot of high value, high risks and low maturity. That’s why, building security in from the outset should be a no-brainer. Proactive cybersecurity means evaluating risk, baking security into software development, planning for threat events, and monitoring networks’ readiness for attacks. Both programmers and security specialists must think like attackers to ensure resiliency of blockchain ecosystems. If they don’t find flaws, guess who will? Bad actors never sleep, so digital security hygiene always applies.

Summing it all up

The security battle is on! In the face of mounting threats, blockchain has all the makings of becoming a firm cybersecurity shield. It has proven itself robust and tamper-proof, though the complete blockchain security and privacy are yet to be achieved. Understanding of blockchain security risks may grow as the technology matures. Meanwhile, its benefits are clear-cut and promising. Will the technology revolutionize data security and justify the hopes of many? The world is waiting.