Blockchain security. Let’s discuss!

Blockchain security. Let’s discuss!

Blockchain Security

What is Blockchain Technology?

Blockchain is an arrangement of registering information that makes it next to impossible to modify, hack, or fraud the system. Recording information can be an asset that is tangible like car, land, money, or intangible like branding, patents, or intellectual property.

In Blockchain technology, each block in the chain contains several transactions. So, whenever a new transaction occurs on the Blockchain, the transaction record is added to every participants’ ledger. These all decentralized data get managed by Distributed Ledger Technology (DLT).

It is amazing to know, DLT – The much-hyped system can reduce a huge amount of record-keeping, streamline supply chains, save money, and agitate IT in ways not seen since the internet arrived.

Key Takeaway:

  • Blockchain is a special type of database.

Where does it begin?

 The first Blockchain conceptualized by a person (or group of people) was known as Satoshi Nakamoto in 2008. After some years, The design was implemented by Nakamoto as a core component of the cryptocurrency bitcoin. Here, it serves as the public ledger for all transactions on the network.

Blockchain security
Blockchain security

How do Blockchain technologies work?

Blockchain is a public electronic ledger developed throughout a P2P system. This system is openly shared among diverse users for generating an unalterable record of transactions, each time-stamped and linked to the previous one. Every time a set of transactions get added, data becomes another block in the chain (hence, the name).

Blockchain can only be updated by consensus between participants in the system, and once new data entered will never be erased. It is an append-many and write-once technology, making it a correct and auditable record of every transaction.

Now let us focus on the types of Blockchain.

Types of Blockchains:

 Currently, there are four types of Blockchain networks.

  1. Public Blockchains,
  2. Private Blockchains,
  3. Consortium Blockchains,
  4. Hybrid Blockchains.

A public Blockchain is a permission-less (non-restrictive) distributed ledger system. Anyone who has successful access to the internet can get signed in on a Blockchain platform to become an authorized node. Bitcoin and Litecoin Blockchains are the examples of the most common public blockchain. 

A private Blockchain is a restrictive network. One can use it over permission Blockchain operative only in a closed network. If you want to access the private blockchain, then you must have the permission of a specific organization or enterprise. Private Blockchain networks utilized for supply chain management, digital identity, voting, asset ownership, etc.

Consortium Blockchain is a semi-decentralized type network and more than one organization manages a Blockchain network. Typically, the consortium Blockchains do access by banks, government organizations, etc.

The combination of the public blockchain network and private blockchain is called Hybrid Blockchain. Dragonchain is an Example of a hybrid Blockchain.

Where can you use Blockchain Technology?

The first use of Blockchain was as part of the cryptocurrency Bitcoin based on Blockchain technology. However, the practical applications of Blockchain extend far beyond cryptocurrencies, and the technology is likely, in time, to impact many industries.

As per the current market, more than 12 prominent Blockchain applications are running in the market, and fewer are BURSTIQ, media chain, propy, opskin, circle, etc.

Blockchain based cryptocurrency
Blockchain based cryptocurrency

How are organizations already using Blockchains?

Companies like Uber, Airbnb, and Expedia act as aggregators, i.e. a centralized platform that connects providers of service with customers who need that service.

The world’s largest tourism company, TUI Group, is pioneering the use of Blockchains as a way to eventually replace travel aggregators, like Expedia.

The nationwide insurance company is trialing a Blockchain solution called RiskBlock, which provides proof-of-insurance information.

Barclays has already launched several Blockchain initiatives for, among other things, tracking financial transactions, combating fraud, and Bank Hapoalim is collaborating with Microsoft to create a Blockchain for managing bank guarantees.

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Most Common Blockchain

 As we discussed earlier in types of blockchain, the most commonly used network is a public blockchain as it is an open ledger system. So, there are numerous nodes from all over the world. Thus public Blockchains are trusted, secure, and transparent is the advantage of public Blockchain.

On the other side Lower TPS, high energy consumptions, stability issues are disadvantages of public Blockchain.

Let’s take the most widely used Blockchain example that is Bitcoin. Bitcoin’s Blockchain is a hugely valuable network. According to research, its current market capacity at the time of writing is over $170 billion. That is why it seems sophisticated and requires essential computationally intense security.

Key Takeaway: 

  • The first bitcoin currency transaction transpired between two computers owned by Nakamoto (a developer) and the late Hal Finney (an early cryptocurrency enthusiast) in January 2009.

Bitcoins do not print, like dollars, Euros, Pounds, or rupees. They are produced by computers using free software and held electronically in programs called wallets. The smallest unit of a bitcoin that can enable microtransactions is called a satoshi.

 

The term Bitcoin has two possible interpretations. The bitcoin token refers to the keys to a unit of the digital currency that users own and trade. A bitcoin token is held in a bitcoin wallet that is identified by a string of numbers and letters, such as,  “1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa.”

Bitcoin can be used to pay for things electronically if both parties are willing. In that sense, it’s like conventional dollars, euros, pounds, or rupees, which can also trade digitally using ledgers owned by centralized banks.

Bitcoin using blockchain. How can you own bitcoin?

If you prefer to buy bitcoin with cash, then such platforms like LocalBitcoins will help you find individuals near you who are willing to exchange bitcoin with cash.

Now it’s time to get aware of Bitcoin ATMs. If you want to exchange Bitcoin with cash, then you can use the Bitcoin ATMs. These machines operate in a way the bank ATMs work. The process you have to do while paying the bills is, hold your wallet’s QR code up to a screen of an ATM, and the corresponding amount of bitcoin beamed to your account.

So the question is, where do you keep your bitcoins?

Before holding any bitcoin, you are required to store it somewhere in the physical world. Like you keep your bitcoin in a wallet. And while you proceed with a transaction, the transferred value into a Bitcoin wallet is included in the blockchain.

Bitcoin wallets keep a private key – a concealed piece of data or seed. This key requires signed transactions, mathematical proof to verify the transaction originates from the wallet owner. If the transaction has been issued and altered by someone, it will get secured with the signature.

Furthermore, All the transactions broadcasted to the network, so it takes around 10 to 20 mins for confirmation. And this process is called mining.

Mining is a distributed agreement system used to confirm pending transactions by including them in the blockchain. It implements a serial order in the blockchain that protects the neutrality of the network and allows various computers to agree on the state of the system. All the transactions meet strict cryptographic rules and get packed in a block and verified by the network.

Now, let us focus on Bitcoin Security.

Bitcoin Security
Bitcoin Security

Bitcoin Security

 Cryptocurrency holders and traders are especially vulnerable to cyber attacks since digital currencies only run electronically. That is why choosing a secure and reliable online Bitcoin wallet is very crucial. To help you keep your cryptos from getting hacked, here are a few ways to dodge clever snares of cybercriminals.

  • Choose a crypto wallet that fits your needs.
  • Enable two-factor authentication.
  • Encrypt your Bitcoin wallet.
  • Backup your entire wallet regularly.
  • Utilize the multi-signature feature.
  • Keep your software updated.
  • Use different passwords for different accounts.
  • Never give away your private key.
  • Don’t click on unknown or suspicious links.
  • Use a secure Internet connection.

Key Takeaway: 

What are Smart contracts in the Blockchain?

 A smart contract is simply a program that works on the Ethereum Blockchain. It is a collection of data and code that remains at a specific address on the Ethereum Blockchain.

If you want to do the transaction and agreements amongst anonymous parties without external enforcement, central entity, or legal system, then the Blockchain supports it through smart contracts.

A smart contract is a computer code agreement done between two people. The agreement run on the Blockchain. It gets stored on a public database that cannot be changed.

 The transactions are initiated successfully once the agreement conditions are met. There is no third-party trust issue that will occur. The most important thing about the smart contact transaction processed by blockchain is; the transaction is sent automatically without relying on anyone or a 3rd party.

Currently, Insurance companies, Health systems, government sectors, and business management use smart contracts. However, to create digital tokens for performing transactions the Ethereum-based smart contracts get used.

Smart Contract having advantages and disadvantages like another program too. So let’s discuss the pros and cons of the smart contract.

Bitcoin digital currency security
Bitcoin digital currency security

Advantages of smart contracts

 Since smart contracts run on Blockchain technology, they provide security, economy and speed, and standardization.

  • Security: The smart contract is distributed and encrypted amongst nodes. The guarantee, the contract will not be changed without your permission.
  • Economy and speed: The contracts have automated processes and most eliminated intermediaries.
  • Standardization: There is a wide range of smart contracts nowadays. You can choose one and change it according to your needs.

Disadvantages of smart contracts

 Smart contracts are imperfect! The following are the Smart contracts loopholes no one can avoid.

  •  The human factor: 

Programmers can meet any small code mistakes. And if the smart contract is in the Blockchain, then it can not be altered. And one can face trouble because of it. The DAO is a good example of a human error. The developers’ blunders in the code proved harmful for the users, and some hackers exploited errors and stole about $60 million.

  • Uncertain legal status: 

Currently, there is no monitoring done from the government side on smart contracts. The issue gets resolved if government institutions decide to make a juridical structure for Smart contracts.

  • Implementation costs: 

Without programming, Smart contracts do perform. It is very important to have an experienced coder on the staff to make fail-proof smart contracts and adopt the internal structure of the company for Blockchain technology.

 Since the Blockchain industry is emerging and changing every day, it is hard to find the ideal team that can convert your idea into a working Blockchain application.

Below 5 top companies that provide end-to-end Blockchain services and security.

LeewayHertz: One of the top Blockchain technology companies presents Blockchain consulting and end-to-end Blockchain development and services to multiple business domains.

Consensys: The company develops secure tools and enterprise Blockchain applications. They have developed and expanded many Enterprise Ethereum solutions.

Blockchain Intelligence Group: It is one of the respected Blockchain technology companies that helps their overseas clients with Blockchain consultation services as per their application development requirements.

Blockchangers: The company has marked its presence in the IT industry as the best customer assistance. They understand the requirements of their clients and offer the potential of Blockchain technology.

ChromaWay: The company delivers smart contract solutions as a Blockchain platform. The company serves industries like real estate and finance.

Moving forward to know everything about Blockchain Security.

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Blockchain Security

Blockchain security is a complete risk management system for a Blockchain network. That uses cybersecurity frameworks, assurance services, and best practices to overcome risks against attacks and fraud.

 When it comes to blockchain security, The IBM Blockchain comes into the picture. The company builds an excellent safety solution and efficient supply chain for the health care, finance, government, insurance, retail, media, and entertainment sectors.

In the Supply chain system, IBM commissioned Forrester to investigate how supply chain leaders are using data to handle the disruptions of today and report on how the use of Blockchain can help them in the future.

As the pandemic continues, healthcare and the life sciences face new challenges, including adapting supply chains to deliver protective equipment and rapidly developing treatments, tests, and vaccines.

Blockchain has already revealed its significance in healthcare and the life sciences by enabling collaboration and trust. Also stated that it will continue to be at the forefront of addressing ever more challenges.

Moving forward, to remove long standing friction, create new solutions and deliver tangible business outcomes, leading financial institutions are trailblazing with IBM Blockchain.

IBM is working with objects at all levels to prove Blockchain’s value in leading government digital transformation. By automating repetitive methods and sharing data amidst permissioned network members in a decentralized way, Blockchain overcomes traditional friction within systems and unlocks the value long-trapped inside hardened organizational silos.

Cybersecurity of crypto
Cybersecurity of crypto

Blockchain exchange work: 

Blockchain exchange is a platform to match buyers and sellers. Both work, in the same way, to exchange other assets, like stocks. Blockchain exchanges tend to charge a small fee, usually a percentage known as a ‘volume-based fee.

The blockchain exchange allows for traders to exchange crypto for crypto. Even in some places, it lets you purchase and sells crypto using fiat.

Now, let us focus on the three types of crypto exchanges in the market:

  • Traditional Trading Platforms
  • Direct Trading Platforms
  • Cryptocurrency Brokers

In traditional trading platforms, according to the current market price, buyers and sellers can trade cryptos. Here, the exchange works as the “middleman” and, most of the time, it does not charge for each transaction.

In Direct trading platforms, buyers and sellers can directly trade as it is a peer-to-peer online ecosystem. Usually, the direct trading platforms allow sellers to set their exchange rate, as the platform is not using fixed market prices.

In Cryptocurrency brokers (online platforms), buyers and sellers can trade cryptocurrencies at a market price. Even they can also trade at a small premium. The exchange is done through the broker as it will not directly connect the buyer and the seller.

An exchange is not the same as a wallet, which is a place for digitally storing cryptocurrency once you’ve bought it. Some platforms, including Luno, provide both. Others don’t, which means traders need to transfer their cryptocurrency elsewhere.

Not all exchanges are created equal. As the official Bitcoin website explains, they ‘provide highly varying degrees of safety, security, privacy, and control over your funds and information.’

Buyers and sellers

First of all, a buyer must have to fund the exchange account to make a purchase. And to do so, one can use the local currency or another cryptocurrency. Even more, almost all exchanges accept bank transfers or debit/credit cards. Some also exchange through PayPal.

Buyers and seller blockchain solutions
Buyers and seller blockchain solutions

Supply and demand

The fact of supply and demand, prices are not set by Exchanges. They act as mediators to connect buyers and sellers, with supply and demand dictating the prices. That is why you might see different prices on different exchanges.

Fraud or Hacking in the Blockchain system

One of the many value proposals for executing Blockchain is the decrease in fraud risk. Blockchain networks have built on permission & non-permission that depends on the type and formation of Blockchain. Such permission-based Blockchain networks restrict the access of the system and can successfully prevent fraudulent activities.

 What Type of Frauds Are Detected?

  • Financial Fraud
  • Identity Frauds
  • Supply chain Fraud

The question that arises after this is, how can blockchain stop frauds? 

Frauds can reduce by enabling real-time information sharing options and by updating the ledger upon the agreement of all parties in the blockchain. That will also lower the overall costs and process time.

Blockchain ensures the security of the digital ID of an individual in a manner that makes it tamper-proof. In cases of identifying data being kept in a permission-required framework, the authorized parties can access a single version of the real information, and verification of transactions can be done only by a known party. That keeps the records safe and valid.

Supply chain fraud is also a major issue faced by several companies in recent times. The supply chain networks seem quite complex, due to the process involved by several people. Yet, with more transparent and easy traceability of product function fraud can be prevented in Blockchain. With security and verification, one can not manipulate blockchain products. Updating takes place once an agreement has been made amongst all approved participants. However, Blockchain digitization helps in tracking back the products to their origins.

How secure is a Blockchain?

Presently, The most secured data protection technology is the only Blockchain. With a wide variety of applications, the Blockchain is used to establish secure networks. And when it comes to secure data exchange, then blockchain development services can beat the traditional approaches.

The adoption of Blockchain technology can improve the relationship between technology and users’ privacy. Blockchain produces a structure of data with inherent security qualities. It’s based on principles of decentralization, cryptography, and consensus that assure trust in transactions.

The participation of members across a distributed network enables decentralization in blockchain technology. That signifies that a single user cannot change the record of transactions, so there is no single point of failure. Though, Blockchain technologies vary in some critical security aspects.

How does Blockchain improve security?

The rapid advancements in digital technology have also introduced new challenges around data security. Organizations need to secure their data by implementing strong authentication and cryptography key vaulting mechanisms.

To implement a Blockchain solution security model, administrators must develop a risk model that can address all business, governance, technology, and process risks. Next, they must evaluate the threats to the blockchain solution and create a threat model. Then, administrators must define the security controls that mitigate the risks and threats based on the following three categories:

  • Enforce security controls that are unique to Blockchain
  • Apply conventional security controls
  • Enforce business controls for Blockchain
How does Blockchain improve security
How does Blockchain improve security?

Conclusion

Blockchain is just one of several evolving technologies that will support what others have called the Fourth Industrial Revolution. But unlike AI, the Internet of Things, and other more visible digital technologies, it is largely an invisible enabler.

Understanding of these technologies and their potential application, a broader set of questions emerges that will keep business, social, and government leaders busy for years to come. We will cover some of these in future publications. Till then if you want to open your trading account for crypto trading then CoinCasso cryptocurrency exchange.

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