Blockchain Security: Is Blockchain Really Secure?

The security of personal data, especially which is stored online, is important and also a human right. For decades, it has been at risk and constantly deteriorated. Blockchain technology provides an elegant solution to this problem. Blockchain, as the name indicates, is a chain of digital blocks that contain a set of transactions. All the transactions in a block, form a Merkel root and a hash is generated using it, which is included in the block header. Each block in the blockchain is connected to the previous block through the block hash value. This in turns makes the blockchain resistant to any sort of tampering, because a hacker would need to change the block containing that transaction as well as those linked to it, to avoid exposure. 

The blockchain is designed to be immutable, tamper-proof and secure. The features that help achieve this are:

• Decentralization
• Cryptography & Hashing
• Consensus Protocol

Let’s discuss these properties.

Decentralization

Blockchain works on a decentralized network where bits and pieces of information are passed and updated to all the participants in a consistent manner. Hence, everyone has the latest updated information with them. When any changes are made, it will get validated by all the participants and once it gets validated, only then will it append in the blockchain. So we can say, decentralization allows for a single version of the truth but no single point of failure.

Cryptography & Hashing

It is a complex mathematical algorithm that prevents attacks. All the transactions are cryptographically hashed and included in the block. Hashing takes an input value and applies a hashing algorithm (SHA-256 in the case of Bitcoin) to produce a new value which we call as a hash digest. The digest is of fixed length depending on the algorithm used. Looking at the digest, it is impossible to guess the value, also, even a slight change in value makes the changes the digest completely, in an unpredictable manner. Now, this hash of the transactions is included in the block header along with the block hash of the previous block, and together a new block hash is generated. Now this block hash will be included in the next block header. This is how a cryptographically secured hash function is used to form a chain of blocks.

In addition to this, every transaction is digitally signed. To explain this, I’ll take an example. Suppose you want to send a few bitcoin to ABC. So you will cryptographically hash my message with my private key and send the hash along with the address of ABC. Now everyone in the network will be able to view the transaction and can validate using my public key, but only ABC will be able to add those bitcoins in his wallet. So, everyone can see the transaction but no one can steal it.

Consensus Protocol

The consensus protocol is an agreement of the majority of participants of the network regarding the validity of the transaction. A single miner validates the transaction while the entire network can confirm to the credibility of the validator by checking the ‘proof-of-work’. So, even if there are few malicious participants in the network, they are easily weeded out and, their opinion never matters.

These fundamental properties form the trifecta of security that integrates into blockchain and discourages any kind of foul play

It’s Good but Not Perfect

Reading all this might have given you the sense that blockchain is secure and that is an absolute fact. That is not the case as there are cracks in the façade. The most persuasive blockchain vulnerabilities are the way blockchain interacts with other entities. Smart contracts can automate many blockchain tasks, but they are only as good as they are coded. Although they are not a part of blockchain, they do interact with it, so if the code is poorly written, hackers could infiltrate the smart contract and steal the wealth.

Similarly, centralized institutions that interact with the blockchain could put the blockchain network at risk. Hackers generally target centralized repositories where there is a single point of failure, a vulnerability they can exploit. So, the security of blockchain technology should not be confused with news about hacks those are carried out in cryptocurrency exchanges.

Here are a few things that could be implemented –

•         Prevent everyone from accessing sensitive information except who are authorized to have access to it. Membership Service Provides (MSP) helps on this. They are responsible to enroll the participants and provide access to their ID according to their role.
•         Protect the private keys using the highest-grade security standards so they can never be misused.

All these capabilities in the blockchain network will add protection it needs to prevent attacks.

Conclusion

I would like to conclude this article on ‘Blockchain Security’ by saying that, a blockchain network is only as secure as its infrastructure. When establishing a blockchain network, you must look for the best platform for deployment. Even though blockchain has inherent features that provide security, known vulnerabilities in the infrastructure can be manipulated by malicious participants. The best approach would be to have an infrastructure with integrated security.

The blockchain is still an emerging technology, and it’s getting better every day. Blockchain researchers are working to patch up security vulnerabilities. We have also witnessed the hard-fork in extreme cases, where they can result in a new version of that blockchain. Considering all things, blockchain is a much better solution to many of the enterprises.  But still, it is important to keep developing and improving the blockchain ecosystem to make it as secure as possible.

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