Is blockchain as secure as we think it is?
Blockchain is a technique of recording information in a way that is largely permanent. Blockchains allow people to add information to a ledger and make it virtually impossible to edit, change, hack or delete. A blockchain is a digital ledger, of sorts, that is duplicated and distributed across a wide variety of networks. The information is also distributed amongst several nodes (or computers), and each chain contains a certain number of transactions. Once a transaction takes place in the blockchain, a record of that transaction is added to the ledger of every single participant. The decentralized process of managing these transactions takes place through a Distributed Ledger Technology.
Why is blockchain so popular?
Many people, organizations and governments have tried to create digital money in the past, but they have all failed miserably. The prevailing issue that plagues these failures is trust. Bitcoin, or cryptocurrency, was designed to solve this problem by implementing a specific type of database called a blockchain. In most normal databases, there is one node who is in charge of the entries. This node also has permissions to change, edit or delete entries in the database. However, crypto is different. When cryptocurrencies work in a blockchain, no one can hack into the system and hence, the integrity of the system is maintained.
Is blockchain the safest way of transacting?
Nothing on the internet is truly invulnerable to hack attempts. Hence, neither is blockchain. However, because of the decentralized nature of the process, an extra layer of defense is added to the entire system. To alter the chain, the typical hacker would have to control more than half of all the computers in the same ledger. This is highly unlikely, but it is still possible.
The main advantage of blockchain technology is supposed to be that it’s more secure, but new technologies are generally hard for people to trust, and this paradox can’t really be avoided.
The largest blockchain networks, Bitcoin and Ethereum, are public and hence, allow anyone who wants to join the chain to do so. Instead of creating a security crisis, having more people on a network enables the network to be more secure over time. More and more people, in this case, check transactions and each other’s work and call out alerts if something doesn’t add up. Here’s the irony. Private blockchain networks, which have kept themselves secure for the prime motive of keeping themselves safe are actually making themselves more vulnerable. Fewer users on these chains means that hackers would have to control a limited number of nodes to manipulate the blockchain, thereby increasing the chances of something like that actually happening.
Hence, blockchain is a decentralized network that lets users protect their information by means of sharing one transaction or piece of data with all relevant stakeholders and nodes connected on the network. With the various use-cases that blockchain presents, it comes as no surprise that cryptocurrency might very well be the digital money of the future.