Is Blockchain Secure?

As we covered in our blog post about the history and future of web exploiting, there would be no Internet without hackers finding vulnerabilities and exploiting them. The way technology progressed, everyday activities as simple as buying groceries were automatized and performed online. This led to the need for safe online financial transactions, without a middleman who could compromise data being shared.

Blockchain technology has been around for many years now, but only during the past couple of years has the public been really intrigued by its potential. With blockchain technology, we were shown the futures of data storage and finance, but blockchain can affect and transform even more industries and services. To better understand the security potential blockchain has, we need to understand what blockchain is, and all the concepts behind it.

Throughout early 2000s, several attempts at creating money by solving computational puzzles failed due to their lack of decentralization; they were running on centralized backend systems.

Then in 2008, Blockchain was invented when Satoshi Nakamoto, a person or possibly a group of people whose true identity is still unknown, released a whitepaper resolving the problem of placing a third-party institution in the middle of a transaction. The work was titled “Bitcoin: A Peer-to-Peer Electronic Cash System,” and it introduced us to blockchain technology as we know it today.

When the first cryptocurrency — Bitcoin -was invented, there was a significant need for validation of transactions without third-party involvement

When every transaction is made, it needs to be verified. Transactions are verified by using someone’s computational power to solve a complex cryptographic algorithm, which only a powerful computer can solve using plenty of electricity. The transaction is verified once the cryptographic equation is resolved. And since no equation is the same, the network knows that the transaction is valid once it is resolved.

This is what we call Proof-of-Work and the process itself is called “mining.” After transactions — solving the complex equations — miners are rewarded with a new block.

how is blockchain secure? 

Since it was created as a public transaction ledger for Bitcoin transactions, it’s still difficult for people to differentiate between the two. It wasn’t until a few years after Blockchain’s introduction in 2014 that people began seeing blockchain as a technology on which you could build other applications, and not just cryptocurrencies. Today, we have almost every major financial institution investing in blockchain research, and the majority of banks are testing how they can implement blockchain into their services.

“According to the survey, the consumer products & manufacturing industry has been the fastest to adopt blockchain technology. Around 74 percent of respondents from the consumer products & manufacturing industry stated that their company was in either the experimentation or the production phase of blockchain development.”, claims Statista on their Global adoption phase for blockchain by industry 2018.

All applications on DAG are processed on a single block and this leads to all transactions occurring simultaneously, allowing quicker processing time.

After Blockchain 2.0, Blockchain 3.0 wasn’t only set to offer new capabilities, but also to work on creating new markets — meeting demands to include large enterprises.

What 3.0 brought us:

• M2M blockchain applications – machine-to-machine communication and transmission of data which can be performed both wireless and wired, in contrast to the standard IoT.
• Layer 2 Services – programming solutions that operate on top of existing blockchains to provide instant, cheap transactions.

We have yet to see what the new technologies being developed will bring us, but offering new capabilities and uses for different markets is certain.

Learn more about newcomers in Blockchain 3.0 technology.

With the ongoing progress of blockchain technology, industries are going into phases of experimentation and finding new ways to implement it. Nobody can be sure of all the new blockchain implementations we’ll see in 2019.

How does blockchain work?

Blockchain is an open, decentralized, transparent ledger that records transactions between two parties, without the need for authentication from a third-party institution. Since it stores data about every transaction that took place, this ledger, a digital file, has a record of the amount of cryptocurrency everyone has. Blockchain makes sure that one piece of data can only have one owner, and that data can’t be copied, only distributed.

Having no middleman during these transactions, it effectively cuts down on costs that are present when we have, for example, banks involved in transactions.

It’s an always-growing list of records, and in blockchain, those records are called blocks. Each of those blocks is timestamped and linked to the previous block. Those blocks are connected together using cryptography, connected with chains, and that allows users to only edit the parts of the blockchain that they own — for which they have a private key.

In order to perform a transaction, you need to have a program that will allow you to store and exchange coins — a wallet, and since only you are able to spend those coins, the wallet is protected by the pairing of the private and public key. When you combine the public and private keys, you are generating a digital signature that is used for verifying ownership.

What also makes blockchain secure is that it is a distributed ledger, meaning that components of that system are located on different networks and that storages for the stored data are not connected to the same processor. For this reason, the records can’t be retroactively changed without changing all other blocks.

Blockchain is decentralized, meaning that storing data in their peer-to-peer network ensures that no data can be held at one centralized institution.

originally published on  https://securitytrails.com/blog/is-blockchain-secure