Blockchain technology provides the number of security benefits in the financial tasks, communications, digital identity, and cryptocurrency etc. But, because blockchain is still in the development phase and growing rapidly by every passing year, so is the chances of vulnerabilities are increasing. This article will guide you through several important security concepts, security benefits provided by the blockchain, and it will also point out some potential limitations which must be considered when using Blockchain.
There are a number of benefits related to the security provided by the blockchain, as compared to other traditional systems:
- DECENTRALIZED TECHNOLOGY – Blockchain technology is decentralized, means it do not rely on or controlled by the centralized server, but it is controlled and maintained by the thousands of computers machines which are connected in the network called Peer-To-Peer or P2P. Each computer contains the copy of the ledger (blockchain) and verifies every new block comes in. So, it will be nearly impossible to hack all the individual machines located at the different places in the world.
- COMBINATION OF PRIVATE AND PUBLIC KEYS – Blockchain uses the combination of private and public keys which are a complex sequence of strings and they cannot be deciphered unless we have authority to view them. This two-key system makes transactions even more reliable and secure.
- TECHNOLOGY BUILT ON CHAIN OF BLOCKS – Blockchain is built on the chain of blocks, each block containing the hash value of the previous block, and any record once added in the blockchain database then it can’t be altered or changed. Now any person or adversary try to alter the transaction in particular block, he will have to change all subsequent blocks, because changing the information in the block causes the change in its hash value, which then make all subsequent blocks invalid. So this makes tampering much more difficult, hence it increases the security of the system significantly.
- HUGE AMOUNT OF VERIFICATION LEVELS – In traditional payment or banking systems, there are usually few levels of verification: at the sender, receiver and bank or any authorized checking system. But in the blockchain, there are thousands of nodes (computers handled by individuals) which have a separate copy of the ledger (blockchain). All these nodes work independently and verify each transaction done in the blockchain. If nodes do not agree on any particular transaction, that transaction gets canceled. This process makes blockchain remain consistent.
BLOCKCHAIN SECURITY LIMITATIONS
Initially, it was a bit surprising for some people to hear that even blockchain is not 100% secure. This is the fact that blockchain is far more secure than traditional systems, but it is not an exception, and no technology remains pure, as the new technologies are being introduced, so are the threats and vulnerabilities. Here, we will discuss some of the proposed limitations seen in the blockchain.
VULNERABILITIES IN BLOCKCHAIN
As mentioned above, blockchain technology is growing rapidly by every passing year, and there are a number of organizations which are turning into this technology for their business purposes. So it is important to address the weaknesses faced by the blockchain if we have interest in the cryptocurrency and blockchain or we think that will be using blockchain in the future.
COMPLEXITY OF THE NETWORK
If we are thinking of creating our own version of the blockchain technology for achieving our goals and objectives, then we need to consider that this technology is a bit complex to use, one small mistake can cause a huge amount of damage. So, we require considerable amount of understanding of this technology and efforts to create the system by using blockchain technology.
SIZE OF THE NETWORK
To implement and execute the blockchain, we need hundreds and thousands of nodes running, to control and maintain the data in the blockchain. It makes blockchain system vulnerable if there are very less amount of nodes working, especially in initial stages of blockchain’s growth, that allows hackers to attack or hack the blockchain system. And, if any hacker convinces 51% or more nodes in the Peer-To-Peer network that a particular block is valid (even it is not), then he gets the control and can easily change the transactions.
SPEED AND EFFICIENCY OF BLOCKCHAIN
The design of the blockchain system plays an important part in the execution, as if the system is not designed correctly as intended, it can cause speed and efficiency issues by not performing tasks instantly or correctly.
STORAGE OF PUBLIC AND PRIVATE KEYS
These two cryptographic keys are key features of blockchain, as they are used in combination to access any particular asset like bitcoin, and it is hard for attackers to steal the information without knowing these two keys, but at the same time these keys can be the reason of information stolen, as any owner of bitcoin does not keep the keys in safe place, and attackers successfully steal these keys from the owner’s mobile, personal computer or email, hence he will easily steal and change the information.
Double-Spending Might Still Be Possible
The problem of double-spending (one currency or bitcoin being used and owned by two or more persons) has been somewhat solved with the development of bitcoins, but this may be possible to do in some other ways, like spoofing owners of bitcoins to resend the transactions, which can allow attackers or hackers to make the double-spending of bitcoins. Spoofing is the process in which hackers or adversaries convince the people that they are authorized entities, so that people can believe them and send their private information to them.