Before we even try to answer the question of better security, let us take a quick look at Blockchain technology, what it was designed to do, and for whom. For starters, a blockchain acts as a database that stores information in a digital format. It is a ledger shared within a computer network’s nodes.
Blockchain can maintain a secure and decentralized way of recording transactions and data without needing a third party. That is why it is popular in cryptocurrency systems; in fact, it is vital because there would be no anonymity for crypto users without it. DAO companies like Bitdao and Uniswap also rely upon blockchain technology to function.
How does it work
A blockchain collects its data into blocks (hence the name) and links them together as each block reaches its maximum capacity. The chain of data formed once all the blocks are linked is called Blockchain. The data entered into these blocks is irreversible and permanently recorded but can be viewed and distributed by anyone. This is vital in cryptocurrency transactions as nobody can alter or delete a transaction once it has been recorded on the block.
In a business scenario, Blockchain works precisely the same way. Take, for example, an insurance company that records client-sensitive data, transactions, and other third-party information. All this information is stored on a company network and backed up on a cloud. In the event of hacking, all that information is compromised, as was seen in the Experian data leak. Had all that data been stored on a blockchain, it would have been nearly impossible to hack. And if the hack had been attempted, the company would have received a notification quickly before it got to the extent it got to.
Blockchain is for people who don’t trust other people but still need to share information with them; they can share data in a secure tamperproof way. If data is placed on a blockchain network, whoever accesses it can be traced in real-time, so whether they were distributing data or just viewing traceability is easy. An example is when hackers hack exchange wallets where people store their cryptocurrency. The hackers’ identity is untraceable, but one can follow the Bitcoin trail. So wherever the hacker stores or spends that stolen bitcoin, you can find it.
In the business context, permissioned blockchains are private blockchains that run on closed systems and require an invitation to join. This can be useful within a company when you don’t want only a select group of employees to access specific data. It also gives management more control over who they give access to. Ripple is an example of a permissioned Blockchain mainly used by the banking industry.
In this age of digitization, the word security has become subjective. What we thought of as secure and impenetrable five years ago is no longer that. Blockchain is high up on the list of digital security even though it’s not impervious to attacks. The blocks on the Blockchain each contain their hash (individual cryptographic print). Once a block has been completed and added to the chain, it is impossible to go back and alter any data on that block.
If anyone attempted to change a node on the chain, it would require them to change that node’s hash, which would cause misalignment with all the other nodes on the chain. The other nodes would recognize this false node and cast it out as illegitimate, and this is called the consensus protocol. For such a hack or breach to be successful, the hacker would have to change 51% or more of the blocks on the chain, which would be very expensive and time-consuming.
Benefits of Using Blockchain
- Authentication of Software Interactions
The ability to authenticate software updates and patches can prevent cybercrime, and organizations can use blockchain hashing to verify updates and downloads from developers. This can also help mitigate supply chain attacks
- Data Integrity
Any data stored on the Blockchain cannot be altered or deleted; this function is significant for cross-border data distribution, as in the case of medical records and personal information captured in one country and used in another.
- High Cost
Maintaining the networks that Blockchain requires to function can be costly and run well into the millions.
- Hacker activity
While the system is virtually impenetrable because it is decentralized, hackers have developed advanced ways of attacking and defrauding the system over the years. In 2019, hackers attacked twelve crypto exchanges.
To answer the question, yes, Blockchain does offer better digital security. The level of security offered by Blockchain is also dependent on what your needs are. Blockchain offers a different kind of security for bitcoin transactions versus client data storage for an international company.
It is important to note that it is not immune to hacking attempts. So it requires the user/owner of the data to be vigilant in using the Blockchain.
Always store your keys safely; once you lose your key, you lose access to your cryptocurrency or data.
Scrutinise all e-mails and protect yourself against phishing attempts to get your personal information to hack your account
Though convenient, we advise against storing your bitcoin on an exchange as these are more susceptible to hacking than wallets.