It’s not surprising that an increasing number of organizations are turning to blockchain security.
Blockchain security technology has become increasingly prevalent in recent years and not just for cryptocurrency investors.
Blockchain uses a decentralized, or distributed, ledger that exists on a host of independent computers, often called nodes, to track, announce and coordinate synchronized transactions. This differs from traditional trading models that rely on a clearinghouse or exchange which tracks everything in a central ledger.
Each node in the decentralized blockchain constantly organizes new data into blocks, and chains them together in an “append only” mode. This append-only structure is an important part of blockchain security.
No one on any node can alter or delete the data on earlier blocks—they can only add to the chain. That the chain can only be added to is one of the core security features of blockchain.
By referring to the chain, participants can confirm transactions. It cuts out the need for a central clearing authority.
It should be noted that blockchain technology is not immune to hacking, but being decentralized gives blockchain a better line of defense. To alter a chain, a hacker or criminal would need control of more than half of all the computers in the same distributed ledger – something that is very unlikely.
The largest and best-known blockchain networks, such as Bitcoin and Ethereum, are public, and allow anyone with a computer and an internet connection to participate. Instead of creating a security crisis, having more people on a blockchain network tends to increase security. More participating nodes means that more people are checking one another’s work and calling out bad actors.
A key to blockchain security education is understanding the difference between permissioned and permissionless blockchains.
Permissioned (private blockchains) are closed systems that require an invitation to join. This can be useful for businesses like companies and banks, which may want more control over data and thus would restrict outsiders from joining.
Permissionless blockchains are public—anyone can transact on these blockchains, with no one in control. The data is copied and stored on nodes worldwide, and individuals can remain more or less anonymous. Bitcoin, Dash, Ethereum and Litecoin are all examples of permissionless blockchains.
Want to know more? Tonex offers Blockchain Security Workshop, a 2-day course where participants learn how to use a comprehensive risk management framework and system applied to blockchain network.
For more information, questions, comments, contact us.