What do you think Blockchain means? Something complex? Or just a long chain of blocks? You may have heard of it if you have been up to date with banking, investing, or cryptocurrency news.
Blockchain is the record-keeping technology behind the bitcoin system. So what is this information that has to be documented? “Block” and “chain” in this situation refers to the digital information “the block” which is stored in a public database “the chain”.
Blocks are made of three parts, typically containing digital pieces of information. The three parts are:
- Storing information regarding any transactions that are the date time and amount in dollars of your recent purchase from any retail store.
- Storing information about who is engaging in these transactions, blocks will not use your actual name but will instead use a unique “digital signature,” more like a username.
- Storing information that is easier to differentiate from other blocks by using a unique code known as “hash.”
Blockchain is a form of distributed ledger technology (DLT) where the immovable data is held in a secure and encrypted way to guarantee that the transactions can never be modified. As much as this form of technology is resistant to attackers, there are also security risks involved.
The blockchain contains a few vulnerabilities not found in centralized databases, as given below:
Endpoints are mainly computer gadgets that individuals and organizations use to access these services. It’s during this point of accessing the blockchain that the data becomes vulnerable and can be altered.
Certain credentials are required before accessing a shared and distributed ledger, which may be exposed by the security weaknesses at these endpoints. Accessing blockchain requires both public and private keys.
You will not be able to access any form of data if you don’t have the right combination of these keys. However, hackers may still be able to steal the blockchain keys from your personal computer or mobile device.
However, you can avoid this by ensuring you have good antivirus on your windows and android devices to ensure that you never store your blockchain keys in text form. And, finally, checking that you never share your keys on any email body. Regularly running anti-malware scans will also help keep the hackers at bay.
Blockchain technology is becoming popular, and with this comes the growing need for 3rd party solutions within the blockchain system. Through this development, potential exposure through vendor risks has been created. 3rd party development will be mainly observed under the areas below:
· Integration platforms
· Payment platforms
· Smart contracts
· Payment processors
Institutions wishing to use these 3rd party apps must be willing to bank on their merchants’ trustworthiness if they are to be assured of their blockchain security. It would be catastrophic, especially if the organization’s operations dwell as a smart contract on the blockchain.
Vetting of merchants based on their experience and reputation should be key to mitigate these risks.
Expansion of Blockchain
So what happens at full scale? A blockchain grows with every new block. To date, no security risks have risen from the expansion of blockchains. However, it may not remain the same for long as blockchain technology is growing fast.
This growth may have potential risks for the blockchain industry. There is limited experience in the DLT industry in how it identifies and responds to problems. This typically means that with every expansion, the technology is headed to an unknown territory. No major change to the system has been made as the price of any blockchain security failure has not been high enough.
There is a danger of the unknown with blockchain expansion. However, people must adopt the best practices on DLT and forge ahead wisely.
Standards and Regulation
Blockchain lacks regulation and standards, and this poses a great security risk since it involves merging technologies. Having the industry regulated may, in the long run, benefit the areas of development expected from having 3rd party solutions.
You do not have to be on high alert when you hear that this form of technology is not yet standardized or regulated. As with other technologies, there will come a time when blockchain technology will be forced to standardize and regulate where necessary.
Validation on a Blockchain is Slow
Before any transaction is declared valid on the blockchain, all the nodes in the network have to come to an understanding. This is a prolonged verification process.
The transaction can be made instantly. However, it is not until the transaction in the related block is verified can the transaction be approved or termed as trustworthy.
There has to be a solution that will allow instant verification of these transactions. By the time a transaction is embedded and verified on the block, a fraud transaction can be launched onto the network to trick it into thinking that double-spending has occurred.