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Security and data protection with cryptocurrency How secure are we?

June 17, 2020

You will surely know that blockchain is a technology that offers a high level of security. Actually, Blockchain security is designed in such a way that practically none of the major projects endangered it directly. And it stands out directly because hacking secondary services is not the same as hacking the base of those services.

In a simpler context, imagine that you have a computer with an operating system and different applications. If a cybercriminal hacks one of these apps, However, since this has no impact on the operation of the operating system, we can say that the operating system is secure and only the application is the one with the vulnerability.

This is exactly what happened in blockchain technology. They hacked exchanges, web wallets, decentralized apps, DeFi services and more. Actions that have certainly led to loss of millionaires. The technological basis of these services, the blockchain as such, continues to function as it was programmed. If we transfer this to a continuous and uninterrupted operation of 11 years, as in the case of Bitcoin, and that your blockchain has not been harmed in any way during this time, we can say that the security of your solution is very good. The same applies to other large projects such as Ethereum, EOS, DASH, Bitcoin Cash and others.

Security and data protection with cryptocurrency How secure are we?Security and data protection with cryptocurrency How secure are we?

If you are new to the blockchain world, you will surely notice that this panorama is very different from what many media in the world show. Most of them prefer a sensational title and a text that shows the ignorance of the technology as such. Then we have to ask ourselves iquest; Qu é makes blockchain technology so secure? Let’s look at the elements that make all of this possible.

decentralization

The main element that gives security to blockchain technology is decentralization. The fact that the network is made up of thousands of nodes located in different parts of the world, and that the functionality of the system depends on these nodes, increases security, resilience to failure and resilience to censorship, which other options do not Location. provide.

To give you a clear example of the importance of decentralization, we are investigating a strange event. In 2016, PayPal, a well-known online payment service, was hired to work for much of the world. The event happened because of an attack staged by a cyber criminal who used it to botnet to attack the PayPal service provider and as a result, the company’s entire service network fell ó for about 2 hours. PayPal was only able to resume normal operations when the attack did not stop due to its enormous centralization and dependency on its service provider. As a result, millions in losses and millions of users who could not use the service.

In contrast, this type of attack on networks like Bitcoin or Ethereum has no effect. If criminals created a DDoS for these networks, the attack would not only be unsuccessful but also costly. Multiple network nodes may be decommissioned, but as long as the rest continue to work, the network continues. work like nothing This enables us to continue using the network without major problems. There í the big difference between decentralized and centralized networks, and that’s just a small example.

Related: Original Blockchain and Bitcoin: Different Ways of Decentralization

Transparency and traceability

Another important point of blockchain security is transparency. When we talk about transparency, we are not just talking about the fact that we can see the entire history of the blockchain freely. But all the data in the network, its operation, its software and its development are; Publicly available.

In contrast, other payment platforms are proprietary in every way. We cannot know how the “magic black box” that enables these services works.

iquest; Qu é Does that allow us? First of all, you need to know how the system works, know its strengths, identify its weaknesses and, above all, improve the system as it develops. At the same time, we can personally check whether the network is operating as expected and monitor the system from start to finish. All of this adds up to the level of security that blockchain technology can offer its users.

Cryptography

The basis of blockchain technology is cryptography, which ensures that everything that happens in the blockchain can be checked. All operational processes of a blockchain hide the use of cryptography at the lowest level.

For example, when a transaction is performed, cryptography is used to develop a payment script that is then cryptographically signed. This ensures that only one person can generate a payment with coins in their possession. The same occurs when a block is mined or generated, or when we perform an interaction operation with decentralized applications (DApps).. In short, everything in the blockchain hides the use of cryptography at a certain level under its origins, a fact that enables us to ensure the security of these operations.

To make it clearer, the cryptographic functions that blockchain uses have been extensively tested over many years to demonstrate their enormous potential to protect the information they process. In fact, with current technology, it would be impossible in practice to break these algorithms.

Immutability and consensus

Another important aspect in building security in blockchain technology comes from the hand of consensus and the unchangeability of our actions. First, The consensus guarantees that the network performed an operation and agreed overall to validate it or not. Secondly, Immutability guarantees that once information has been added to the blockchain, it cannot be changed in any way.

The combination of these concepts enables the creation of a solid basis for security. On the one hand, if the network reaches a consensus to accept a transaction and if it is then stored in the network, we can be sure that this is not possible to be modified or changed. And although there are vectors that attack this functionality (like the 51% attack), it is so complex and expensive to execute that it is simply not worth considering.

guide

Governance or participation rules in the development of blockchain technology also play an important role in security. Let’s keep in mind that most current blockchain projects are free software projects, which means that everyone in the world can contribute to their development. Without the necessary control, however, this could lead to project failures. Ironically, the blockchain welcomes the decentralization of the network, but its development has varying degrees of centralization, which are often reduced to small and closed development groups.

However, each platform defines its rules for participation, operation and governance. For example, there may be public platforms that can be accessed without restrictions, e.g. B. Bitcoin or Ethereum. Or there are private or authorized platforms that require participation in it. Anyway, The chosen participation and governance system determines how the project is developed and who can contribute to this development. For example, projects like Bitcoin or Ethereum make many development decisions that the community has to make, while a small development team has the opportunity to directly develop and implement ideas, especially in security problems.

Protection against attacks

Another point for blockchain security is the active development of protective measures against various attack methods on technology. As we know, security in the digital world is never 100% guaranteed. Programs can have errors, programming languages ​​can also lead to errors, cryptographic systems and the many other elements of technology can leave the door open for attacks.

This is a situation that blockchain and cryptocurrency developers know very well and are indeed transparent. Many projects clarify possible attack schemes and vulnerabilities, but at the same time show ways to avoid and protect them. This includes future technology attacks that are still under development, such as quantum computers.. So í In this constant flow of vulnerability studies and solution developments, we can see an enormous improvement in the global security of blockchain projects.

Related: Promoting a 51% attack on Bitcoin is expensive