Blockchain is a relatively new technology in the modern world. Unlike conventional centralized systems, blockchain is decentralized and distributed. It operates using various mechanisms, including advanced encryption techniques and methods based on different mathematical models.
This innovative technology is often advertised as the safest method for financial transactions. However, the question arises: How Is Blockchain Security Ensured? Is it possible for this technology to be hacked?
In the continuation of this article, we will address these questions. But before that, we delve into examining fundamental concepts about blockchain. These points will aid your understanding of blockchain and its security. Stay withย Crypto Hovel๐.
What Is Blockchain?
Blockchain is a technology that allows users and organizations to store and process data through distributed and structured blocks existing in the blockchain network. Each new block stores a transaction or a package of transactions that is connected in an encrypted chain to all the existing previous blocks.
All transactions within the blocks are confirmed by a consensus mechanism and agreed upon, ensuring the accuracy and correctness of each transaction. In other words, blockchain technology, through the participation of members in a distributed network, enables decentralization. There is no suspicious point, and a user cannot alter the transaction records.
Security Based on Types of Blockchains
Blockchain networks can vary in terms of who can participate and access the data. These networks are commonly referred to as public or private, indicating who is authorized to participate, whether licensed or unlicensed, explaining how participants access the network. Security in blockchain differs based on public and private blockchains.
Public Blockchains
Public blockchain networks generally allow anyone to join and participants remain anonymous. A public blockchain utilizes internet-connected computers to validate transactions and achieve consensus. Bitcoin is probably the most recognized example of a public blockchain, where miners attempt to solve complex encryption problems to establish proof of work and validate transactions. There are some identity controls and limited access in this type of network, mainly through public keys.
Private Blockchains
Private blockchains utilize identity verification for membership confirmation and access to privileges, typically granting membership solely to recognized organizations. These organizations collectively form a “private business network” accessible exclusively to members.
A private blockchain in an authorized network reaches consensus through a process called “selective confirmation,” where identified users validate transactions. Only members with specific access and permissions can maintain the ledger of transactions. This type of network requires stricter identity controls and access management.
How Is Blockchain Security Ensured?
The blockchain, although it has resolved many security issues present in financial transactions, cannot be definitively claimed to be completely secure. However, blockchain possesses features that have successfully gained the trust of users and alleviated many concerns; features such as tamper-proofing, immutability, and encryption in a chain-like fashion.In the following, we will delve further into the explanations of these features.
Distributed Ledger Technology
The technology of distributed ledger is a digital system for recording asset transactions, in which transactions and their details are simultaneously recorded in multiple locations in a distributed manner.
A distributed ledger is a chain of blocks in which information is first encrypted and then placed in blocks, and there is absolutely no possibility of changing or deleting information. And after a transaction and data is recorded in it, the information will also be recorded in all other nodes around the world.
This space is created by bringing together people who make their storage space and bandwidth available to the network. Typically, these participants have an economic incentive to provide resources, and if they do not comply with the rules or fail to store and provide files, they will be penalized.
Security through Blocks
The term ‘blockchain’ is composed of two words, ‘block’ and ‘chain,’ meaning a chain of blocks. Blockchain is a chain of numerous blocks created by connecting these blocks together, with each block containing transaction records. This feature of blockchain is one of the most significant aspects that greatly contributes to the protection of data.
In blockchain, each block is linked to previous and subsequent blocks and carries the hash of the previous block. If a hacker wants to compromise the blockchain network and make changes, they would need to hack more than half of these blocks, which is practically impossible in terms of cost and time.
Transparency
All information and computations on the blockchain are accessible to all individuals connected to the internet. Therefore, transparency is at its peak, although in private blockchains, access is possible only for members with authorization to confirm and view transactions.
By inspecting the ledger, a user cannot discern the identities of other users and can only observe the transaction processes. Simultaneously, while all users have access to the ledger, the privacy of each user is largely maintained.
Smart Contracts
A smart contract is a code executed on the blockchain to review and execute the terms of an agreement without the need for intermediaries. Through smart contracts, programs and projects can be developed to continue their work without any intermediaries or interruptions. Decentralized applications can be implemented in this manner.
Smart contracts are traceable, irreversible, and transparent. In fact, a smart contract is a program that can be stored on the blockchain and activated under certain pre-defined conditions. These contracts are used for the automatic execution of agreements, initiating the process and workflow automatically. When the conditions are met, the next activity begins.
Can Blockchain Be Hacked?
Yes, blockchain can be hacked, but it is highly difficult and costly. To hack a blockchain, a hacker would need to gain access to the majority of network computers and alter their data. This requires significant resources and technical knowledge and is currently very challenging to accomplish.
Moreover, as blockchain becomes more widespread and has more users, hacking becomes even more challenging and expensive. Even if there was previously a possibility of hacking Bitcoin, currently, the likelihood of such an occurrence has significantly diminished. This observation holds true for all type of blockchains.
How do Hackers attack blockchain technology?
Hackers and scammers threaten the security of blockchains through four main methods:
- Phishing Attacks: Phishing is a fraudulent attempt to obtain a user’s credentials. Scammers send emails to wallet key owners designed to appear as if coming from a legitimate source. Using forged hyperlinks, these emails prompt users to provide their credentials. Gaining access to user credentials and other sensitive information can lead to harm for the user and the blockchain network.
- Routing Attacks: Blockchains rely on the rapid and direct transfer of large amounts of data. Hackers can track data during transmission to internet service providers. In a routing attack, participants in the blockchain usually cannot detect the threat, making everything appear normal. However, behind the scenes, scammers extract confidential data or currencies.
- Sybil Attack: In a Sybil attack, hackers create numerous fake network identities and use them to crash the network and disrupt the system. “Sybil” refers to a famous character in a book who suffers from multiple identity disorders.
Conclusion
How Is Blockchain Security Ensured? Blockchain technology is a secure technology that can be utilized to safeguard information against potential attacks. However, like any other technology, it is not immune to possible threats, and necessary security measures must be taken to protect data in blockchain networks. With the development and evolution of blockchain technology, it is expected to play an increasingly significant role in maintaining the security of information.
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