Aspire Thought Leadership! Wondering What is Blockchain Security? Find out more on Blockchain Security and how fortune 500 companies use this approach
Blockchain [What is Blockchain?] is on two sides of the same coin, in that it has innovative practices that reinforce existing cybersecurity, but just like any other electronic entity, it needs securing of its own.
The CIA triad is a security model designed to protect information. The three principles are Confidentiality, Integrity and Availability. It aims to protect an organization’s data, devices and networks.
The confidentiality principle ensures that all information goes undisclosed. This means that only approved users are granted access to view and change information.
 |
| What is Blockchain Security? |
The integrity principle relies on the confidentiality principle being functional. As long as information is safe and untainted, integrity remains intact.
The availability principle ensures that all devices work at full capacity so that the relevant parties have access to any and all information whenever they need it.
Blockchain has taken the CIA triad, implemented and in some instances, improved it.
In blockchain, we can look at the heavy encryption as adhering to the confidentiality aspect [examples of disruptive technology]. Anything on a computer can be hacked, but the blockchain encryption is near impossible to break through. It would take a lot of time and energy to penetrate, so the information in the blocks is safe.
The verification of transactions within the blockchain framework speaks to the integrity principle [benefits of blockchain]. We can be certain that the information stored has not been interfered with.
Blockchain Security Basics
The fact that all the data and functions in the blockchain network are not concentrated in one place makes it easier to verify transactions [application of blockchain]. There are multiple computers in a single distributed ledger. For the chain to be compromised, one person would have to assume control of at least 60% of those computers.
The largest blockchain networks allow members of the public access [blockchain use cases]. On the surface that may seem like a bad idea, but having so many computers on one network boosts security. The more people there are on the network, the easier it is to verify transactions. Also, the more computers there are on the network the harder it becomes to gain unsanctioned access to any blocks on the chain.
Permissioned Blockchains
Permissioned Blockchains are private distributed ledgers that can only be accessed with pre-authorization. Not all users have far ranging control of all aspects in the blockchain though, there are ledger administrators who are in control of the access control layer of the ledger. They are also subject to verification checks but are the only people who are authorized to grant other users access. They are mainly used by companies that have a lot of sensitive information, like banks. Ripple is a permissioned blockchain that was developed by the banking industry to cut transaction costs [blockchain industry].
The key characteristics of a permissioned blockchain are:
- There is limited transparency
- There is no anonymity
- There is also no central authority, but ledger administrators can allow or deny access.
Advantages of a Permissioned Blockchain:
- Provides fixed signatures that encrypt all transactions, making them more secure
- All users in the network are completely anonymous
- Because there are no third parties, there isn’t a long waiting period between transactions
- Information is not stored in a central archive so it's easily accessible from any location at any time
Disadvantages of a Permissioned Blockchain:
- The security of a permissioned network relies heavily on the integrity of its users
- There is an element of censorship, because ledger administrators can restrict transactions
Permissionless Blockchains
Permissionless Blockchains are open to the public. Anybody with a computer can transact on these. All data is stored on several computers around the world and users are pretty much anonymous. Most cryptocurrencies use these networks.
The key characteristics of a permissionless blockchain are:
- Complete transparency on all transactions
- Anonymity
- Operates without a central authority
Advantages of a Permissionless Blockchain:
- Less prone to cyber attacks. A hacker would have to gain control of at least 51% of the network to be able to do any damage
- Uncensored. Because there are so many nodes participating in the network, there cannot be a central authority
Disadvantages of a Permissionless Blockchain:
- Even though we’ve praised blockchain networks for being completely anonymous, there are some drawbacks. If by chance, somebody was to successfully commit fraud, it would be difficult to track them down. Also, people have been reported to use the blockchain network for unlawful activities.
- Bitcoin relies heavily on the PoW system, and while it ensures security, it consumes a lot of energy and ends up being quite costly.
- The block size on a permissionless blockchain is limited.
The Role of Miners in Blockchain
Mining has really taken off since Bitcoin arrived on the scene. Not only do they receive Bitcoin, but they add to the blockchain security protocol. Miners task themselves with validating all transactions and making sure they adhere to the Bitcoin code. On the Bitcoin blockchain, miners present their Proof of Work which signifies why they either approve or deny a particular transaction. They get paid in Bitcoin for every transaction they successfully validate.
How Blockchain Security Averts Double Spending
Blockchain developers are cautiously optimistic about the steps they’ve taken to ensure visibility and security on different networks. But they are realistic about the fact that there is always a slim chance that some things can go unseen. Blockchains could fall victim to a double spending attack and a user could spend one unit of cryptocurrency a number of times before anything is picked up on the network [Blockchain and cryptocurrency basics].
On the blockchains of the various cryptocurrencies, each network has to reach a consensus on the order of a transaction to be able to confirm and share them in full view of the entire network.
The first ever cryptocurrency to solve the double spending problem was Bitcoin. Whenever a user would try and spend the same coin twice by sending it to two other users at the same time, both transactions would end up in a store for unconfirmed transactions. The first payment would be added to the coin’s chain as a block. The second transaction wouldn’t fit on the chain because it would be connected to the first and then the transaction would fail completely.
Blockchain Security Risks
Blockchain is a pretty solid technology but it has its vulnerabilities. Even though it’s difficult, there are a few ways Hackers could compromise the system. These are some of the ways:
- Because the blockchain is decentralized there’s a ton of information traveling through cyberspace [blockchain in finance]. A talented hacker could gain access to data while it’s on its way to the Internet Service Provider. Unfortunately there is no alert for this, so attacks like this can go unnoticed.
- Wide-reaching public blockchains rely on a large number of computers for the purpose of mining. If a group of miners were to get together, they would have enough computing power to take over 50% of the network’s mining capacity. This is called a 51% attack.
- Hackers can create an inordinate amount of false identities and crash a specific blockchain network. These are called Sybil attacks.
- An age-old practice for hackers is phishing. Unfortunately blockchain isn’t immune. Hackers send well designed and constructed false emails requesting the login credentials of cryptocurrency wallet holders.
- The lack of human involvement was originally what sold a lot of people on Blockchains, but now it’s receiving some mild criticism. People have cited the anonymity that the network allows as being the reason why it is used by unsavory characters like terrorist groups. It is said that they make use of blockchains and cryptocurrency to launder their money thus eluding banks and the long arm of the law.
- As previously stated, blockchains need a ton of power to operate. According to Morgan Stanley, the bitcoin network consumes the same amount of energy as 2 million homes in the United States. The mining, which is a huge part of the model, is responsible for a lot of that consumption. The worst case scenario would be that the price of coins decreases and the price of electricity increases. This would see the number of miner’s decreasing heavily.
Blockchain Security in Practice
While there is a standard for how a blockchain is supposed to operate, not all blockchains are exactly the same. Some companies have amended their security measures, either to save on costs or to cater to their specific security needs.
Here are six examples:
Mobilecoin
Mobilecoin is a cryptocurrency company located in California. They are generating a safe and easy to use cryptocurrency for companies that can’t afford to implement ledger security procedures on their own. Mobilecoin replaces transaction service providers by keeping transaction information encrypted on both sides. Mobilecoin works with WhatsApp and Facebook Messenger.
Coinbase
Coinbase, also based in California is a company that facilitates the acquiring and exchange of most, if not all cryptocurrencies. Every customer gets a digital wallet with a password. Coinbase relies solely on encryption and every employee is subject to exhaustive background checks to ensure the safety of their customers’ cryptocurrency.
J.P. Morgan
J.P. Morgan is a well-known financial institution in the United States. They have developed a version of Ethereum called Quorum. It caters to the specific needs of enterprises and uses blockchain technology to execute private transactions [blockchain for enterprise]. They make use of Smart contracts on their network to ensure transparency and accuracy on all transactions [smart contracts in blockchain].
Lockheed Martin
Lockheed Martin is a defense contractor. A defense contractor is an entity that has an agreement with the United States to produce arms or take up arms for the national defense force. It is the first defense contractor to make use of blockchain security. They are collaborating with Guardtime federal to implement blockchain protocols in their software development [Blockchain Programming], supply chain processes and engineering systems. They are using a blockchain network to keep track of their arms development systems [What is Blockchain Development?].
Cisco
Cisco is one of the largest tech companies, also located in California. They proposed the idea that blockchain complements the Internet of Things because there are no single points of failure and important information can be protected by encryption. If the Internet of Things adopts blockchain as it’s preferred network, it could see a spike in Blockchain’s profile [IoT and Blockchain].
Hashed Health
Hashed Health is a healthcare innovation firm located in Tennessee. They want to spearhead the movement to get the healthcare industry to make use of blockchain technology. Hashed Health has various subsidiaries and each one of them utilizes different facets of blockchain. They have already worked with a number of hospitals and facilitated the building of various blockchain networks that store and give access to patient information.
COMMENTS