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What Makes A Blockchain Secure?

BitForex Editor
Dec 11, 2020

The distributed ledger technology, referred to as blockchain, is often considered to be one of the best means of securing transactions. A lot of people usually get skeptical when they hear something is "the best." However, before proceeding to explain how blockchain functions, it is necessary first of all to understand the meaning of blockchain.

What is Blockchain?

A blockchain, as the name best suggests, refers to a chain of digital blocks that contain transaction records. Each block is linked or connected to the blocks after and before it. Through this, it is next to impossible and difficult to tamper or alter a single record as a hacker will need to make changes to the block which contains the record and those connected to it in other to avoid detection. While this alone might seem like a deterrence or obstruction, blockchain technology still possess some other characteristics that serve as an additional means of security

Blockchains are secured through various mechanisms ranging from advanced cryptographic techniques as well as a mathematical model of behavior and decision making. The blockchain technology is the supporting structure of major cryptocurrency systems and also serves as a means of preventing the duplication or destruction of the digital money of most cryptocurrency platforms

Blockchain technology is also being integrated into various other areas where security and data immutability is highly valuable. Some examples of fields where the technology is explored include; supply chain management, medical databases, and the tracking and recording of charity donations.

 The aspect of blockchain security is one that should not be considered as a simple subject, which is why it is necessary to note the mechanisms and basic concepts that allow for the absolute protection of these cutting-edge systems.

The Concepts Of Consensus And Immutability

 Although there are numerous features that contribute to the security associated with blockchain, there are, however, two of the most essential features which must be considered, and they are "immutability" and "consensus." The consensus is the capability of the nodes present in a distributed blockchain network to approve or assent on the true state of a network as well as on the authenticity of transactions. The process of achieving consensus relies on consensus algorithms.

Immutability can be best explained as blockchains' capability to block or prevent the changing of transactions that have already been certified or confirmed. While these transactions are usually related to the transfer of cryptocurrencies, they, however, can also involve the record of other non-monetary forms of digital data.

The combination of immutability, as well as consensus, provides the framework and support for data security in a blockchain network. While immutability ensures the honesty of transaction and data records after each new block of data is validated, consensus algorithms, on the other hand, ensures and guarantees that the rules of the system are strictly adhered to and followed. It also makes sure that all parties involved are in agreement regarding the current state of the network.

The Role Of Cryptography In Blockchain Security

Blockchains are heavily dependent on "cryptography" in other to attain and guarantee their data security. In this aspect, "cryptographic hashing functions" are highly essential as they play an essential role. Hashing refers to a process by which an algorithm (hash function) collects a data input of any size and sends and out(hash) that includes a fixed and predictable length or size.

Irrespective of the input size, the same length will always be shown by the output. However, if, on any account, there is a change to the input, then the output will be complexly different. If there is no change to the input, then the resulting hash will always remain the same irrespective of how many times the hash function is run.

In context, each block's hash is created based on the data present within the block as well as the hash of the previous block. These hash identifiers are of significant importance, especially in relation to ensuring the immutability and security of the blockchain.

Cryptography, apart from playing an essential role in ensuring the protection of transaction records on ledgers. It also ensures the security of the wallets used to store or save units of cryptocurrency. The private and public keys that allow users to send as well as receive payments are generated through the use of asymmetric or public-key cryptography.

 Private keys serve the purpose of generating digital signatures for transactions, which in turn makes it possible to authenticate and validate the ownership of the coins being sent. Asymmetric cryptography prevents anyone besides the holder of the private key from gaining access to funds that are kept in a cryptocurrency wallet, thereby guaranteeing the safety of those funds until the said time when the owner decides to spend it. It is important to note that this only works effectively as long as the private key is not compromised or shared.

Crypto-Economics

Another idea other than cryptography was initially conceived and it was popularly known as, “crypto-economics." This field is explored in other to ensure the protection of a blockchain so as to enable secured transactions between parties in the agreement.

In context, crypto-economics focuses on the study of economics within blockchain protocols as well as the possible outcomes their design may show based on the behavior of its participant. Crypto-economics security is based on the conception or belief that blockchain systems provide an excellent incentive for nodes to act with integrity than adopting faulty or malicious behaviors.

In conclusion, through the combination of cryptography as well as game theory, blockchains can easily experience and obtain increased levels of security as a distributed system. Typical to all systems, it is essential for these two fields of knowledge to be applied correctly. Balance and stability between security and decentralization are vital, especially in building an effective and reliable cryptocurrency network. As blockchains use continue to evolve, so will their security systems, as they will also change and adapt in order to satisfy and meet the requirements of different applications.

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