Blockchain security: Know the pros and cons of using blockchain!

Blockchain technology creates a data structure with built-in security features. It is built on encryption, decentralization, and consensus principles, which assure transaction trust. The information in most blockchains or digital currency is organized into blocks, with each block containing one or more transactions.

Agreement, authenticity, integrity, and closure are all features of blockchain, which is a shared, replicated, and permissioned ledger. The shared ledger guarantees that participants have control over whatever assets they share and that they are aware of the identities of the other participants with whom they are interacting. Participants can also benefit from blockchain’s verifiable endorsement, as well as its secrecy – information is kept private.

The difference in security according to blockchain types:

Public or private networks are generally designated as public or private, indicating who is permitted to join, and permissioned or permissionless, indicating how users get access to the network. Websites like digital currency  can have more information. 

What is private and public blockchain?

  • Anyone can join a public blockchain network, and participants are generally nameless. A public blockchain makes it possible to have transactions and achieve consensus using the internet. The cryptocurrency network’s machines, or “miners,” attempt to solve a difficult cryptographic challenge to generate proof of work and therefore confirm the transaction. In this sort of network, there are a few identifications and access restrictions other than public keys.
  • Private blockchains rely on identification to verify membership and access credentials, and usually only allow well-known companies to participate. The groups get together to establish a secret, members-only “business network.”In a permissioned network, a private blockchain reaches consensus using a process known as “selective endorsement,” in which recognized users validate transactions. The transaction ledger can only be maintained by members with particular access and privileges. This sort of network needs additional identification and access management.

It’s essential to consider which sort of network would best fit your company goals while developing a blockchain application. Public and permissionless networks, on the other hand, can achieve more decentralization and dispersion.

How do hackers attack the system?

  • Phishing attacks: Phishing is a method of obtaining a user’s credentials through deception. Fraudsters write messages to wallet key owners that appear to come from a genuine source. Users are asked for their credentials via bogus URLs in the emails. It is important to keep the passwords safe from hackers and fraudsters. 
  • Routing attacks: Massive data transfers can be monitored by hackers very easily. Because blockchain participants can’t perceive the threat in a routing attack, everything appears normal. Fraudsters, on the other hand, have extracted private data or currencies behind shadows.
  • Sybil attacks: Hackers generate and utilize multiple fake network identities in a Sybil attack to flood the network and damage the system. Sybil is a fictional character that suffers from multiple personality disorder.
  • 51% attacks: Mining, especially for large-scale public blockchains, necessitates a significant amount of computer power. However, if a miner or a group of hackers could pool enough assets, they might control more than half of the mining power on a blockchain network. Possessing control over the ledger and the capacity to alter it means having more than 50% of the power.

What other risks should blockchain systems be aware of?

  • Process: These dangers are linked to the numerous procedures that a blockchain solution’s design and operations need.
  • Technology: The technology used to accomplish various procedures and business demands may not always be the optimal option, which might result in security issues.

Therefore, some amount of research is needed before one goes to invest in cryptocurrency. The security threats should be known by everyone.