Cybercrime is a major threat to the smooth functioning of the world. It is both costly and dangerous. Blockchain is a digital ledger that records transactions and employs cryptographic encryptions, smart contracts, and decentralization to keep data safe. As it stands, blockchain is the best possible way to put an end to cybersecurity breaches.
This article takes a look at how blockchain achieves the same and later explores real-life examples of data protection by blockchain.
Blockchain and Data Hacking
Blockchain has applications in a variety of sectors. It is said to be one of the most disruptive technologies in the 21st century because of its versatility and ability to prevent security breaches. It is important to understand the basic building blocks of blockchain in order to understand how it achieves this level of security.
As mentioned before, a blockchain is a digital ledger that records transactions in basic units called blocks.
The data blocks are cryptographically sealed using a process called hashing. Hashing turns data into a series of symbols of a certain length. This series of hash is impossible to reverse engineer into its initial data. This makes transactions unchangeable.
Each transaction consists of a stamp that represents the data block of the blockchain’s history. This stamp is necessary to verify the present holder of an asset. When an asset transfer occurs, the blockchain authenticates the transaction history, and the ownership transfer occurs.
To change a transaction this hacker would have to reverse engineer the hash of the sealed block. But altering the hash means changing the hash output. The altered hash would be out of sync with the existing stamps. This instantly alerts the system, which then rejects the resealed block.
What keeps Blockchain Technology immune to hacking?
A blockchain ledger is decentralized. This means all nodes have access to the transaction history. A node is a computer that participates in the blockchain. For example, major cryptocurrencies have millions of nodes working worldwide. If a change has to be made on a blockchain, at least 51% of nodes must vote for it. In other words, 51% of the network should be convinced that the transaction is authentic and that the right owner is behind the transfer.
For example, in the case of Bitcoin, the sender should send a private key proving their ownership and a public key that denotes the digital wallet where the Bitcoin is stored.
After a transaction is stored on a block and becomes a part of the blockchain, altering it becomes close to impossible. Making a change to the transaction would require two things:
- Reverse engineering the hashed block and altering the transaction data
- More than 51% of nodes need to do this simultaneously because each node has a copy of the recorded transactions
This makes it near impossible to hack a blockchain.
However, theoretically the possibility to reverse engineer a hashed block exists. But they have to face numerous possibilities—-
- More than 51% of nodes need to be hacked simultaneously, and a new fraudulent block is inserted into each.
- Suppose the block in question is not the final one, all the blocks that came after it must be altered, unhashed, and replaced. This is to prevent the stamps from going out of sync.
These operations would require enormous processing capability and computing power unattainable to any machine today.
Hence, it is safe to say that blockchain hacking is near impossible.
How blockchain can help boost cybersecurity
Thanks to the secure nature of blockchain, it has applications in many domains in today’s world. Let’s check out some of the top use cases.
The Internet of Things (IoT) is more popular now but the domain is mostly unregulated. Imagine you own a self-driving car. If it’s not protected, hackers may access it. Blockchain ensures the security of these systems through device-to-device encryption. It protects communication, and authentication, which protects the IoT systems.
Protects transmitted data
Data encryption using blockchain keeps away unauthorized access by hackers and the subsequent data breach.
Protects crucial data
The amount of data is increasing exponentially day by day. Blockchain storage keeps this data in decentralized protection and also keeps it safe from hackers.
Safety during a software download
Blockchain can verify and update installers during software downloads on devices. Every blockchain store hashes. Each time a new software identity pops up, the blockchain-based system can compare the new hash with existing hashes to determine their authenticity.
Practical examples of how blockchain protects data worldwide
Here are some examples where blockchain technology helps data security in multiple sectors:
Australian Government-Government sector
The Australian government plans to build cybersecurity using distributed ledger technology (DLT). It teamed up with IBM to build a blockchain ecosystem that secures government documents.
Barclays is a retail banking company from England looking to employ blockchain to secure customer information. The company has applied for a patent for a blockchain system for secure fund transfer. Besides, it has plans to make cryptocurrency transfers secure through distributed ledger technology (DLT).
CoinFantasy-Play to earn gaming sector
CoinFantasy is a crypto gaming platform that uses a play-to-earn model. It is decentralized and allows users to play by teaming up with the cryptocurrency they believe in.
Coinbase is a popular crypto trading platform with more than 20 million users. It uses blockchain to encrypt passwords and crypto wallets on a secure database. Users can trade in cryptocurrencies including Bitcoin, Ethereum, and Litecoin on the platform.
Philips Healthcare-Health sector
Philips healthcare collaborates with hospitals worldwide to build a healthcare platform through blockchain. The platform will guide in discovery and analysis of administrative, operational, and medical data.
JP Morgan-Retail banking sector
JP Morgan, the biggest financial institution in America, built a platform, Quorum, using the Ethereum blockchain. The platform uses blockchain to carry out private transfers. Smart contracts on Quorum can make cryptographically protected transactions while keeping them transparent.
State of Colorado-Government sector
In 2018, Colorado Senate passed a bill demanding the government to include blockchain as a data protection tool and secure all data records. The fact that it gets up to 8 million hacking attempts daily is why they rightly turned to the blockchain.
The Chinese military is planning to use blockchain to protect its military and government data from foreign invaders. The government is looking into blockchain security to protect intelligence operation data and communications between officials.
The decentralized nature of blockchain makes it an ideal technology for cybersecurity. As we saw above, blockchain is already used to protect data by companies in all domains. We can definitely see a bigger scale of blockchain adoption intended for data protection in the coming years. Check out our latest article on Tokenomics and its importance.