Blockchain network vastly improves cyber-security
The birth of the internet in the 1970’s represented massive change, ushering a new era of instantaneous interconnection and freedom of information, increasing our potential as a species and revolutionizing the way we apply ourselves in almost every industry imaginable. With the incredible rate of technological advance, it is no wonder that our means of providing adequate security for Internet-dependent services have lagged behind what one would consider adequate. As demonstrated by the Equifax hack and many others like it, we are in a time where security of our assets and information is not guaranteed, nor can it be expected to be with the systems most utilized today. Currently, our methods of online banking and centralized control are dependant upon multiple entities to ensure that one would have access to the level of personal security that the average person would deem appropriate for data of such importance. This is where Blockchain comes into play.
Why is Blockchain Secure?
Blockchain technology offers a way for people to secure their network’s data in an immutable chain that is not subject to the kind of attacks that one would see in our current system. Within Blockchain, every new block of data is dependant on data from the previous block, creating an inherently secure data structure that cannot be subject to undetectable changes. These blocks are all created in real time and are verified using various methods of consensus wherein all members of the network agree upon the record created using the system’s hashing algorithm (SHA-256 for example). To create a block, a miner must complete a series of cryptographic functions, and due to the decentralized nature of the network, any fraudulent actions can be easily spotted when compared to other miners’ blocks. Since networks like Bitcoin, Ethereum, and Litecoin are decentralized in control but centralized concerning record (in that there is one chain or historical record that everybody has access to), the use of Blockchain network vastly improves cyber-security by having fewer fronts to protect.
The inherent properties of Blockchain technology enable the user to be confident in the security of the network and guarantees that were something to go wrong the malicious actions could be detected and retraced by forensic Blockchain analyzers and optionally remedied through a hard-fork away from the tainted chain. Additionally, Blockchain is resistant to DDoS attacks (Distributed Denial of Service), tamper-proof, is only susceptible to a 51% attack (see Blockchain Basics article for more). So long as your tokens are kept offline in what is called a cold wallet (where a hot wallet would be accessible through the internet), the only other entities one would need to trust would be the integrity of the entire token system and their personal networks. If one were to choose to get a hardware wallet or keep their wallet details from ever being exposed to the Internet, a level of security incomparable to that of traditional online banking is achieved. That being said, this entire notion is based on the assumption that networks like Bitcoin, Litecoin, and Ethereum are indeed as secure as they are proclaimed to be. How can one trust these decentralized networks? Are they secure?
How secure is this system?
As discussed in the Blockchain Basics article, the 51% attack is theorized to be the only way to overcome the network strength of Blockchain networks. In Satoshi Nakamoto’s Bitcoin White Paper, the theory behind this assumption is discussed in more detail.
Currently, the total hashrate or computing power of the Bitcoin network, for example, is around 16,400,000 TH/s. To continuously perform computations at this incredibly high rate the Bitcoin network requires an annual energy consumption that is comparable to that of Ireland (30.14 TWh annually). A rough estimate of the number of mining computers on the Bitcoin network yields us a figure in the range of 10,000 – 15,000. Considering an overwhelming majority of these machines will be Application Specific Integrated Circuits (ASIC) which are incredibly time and capital intensive to produce, acquiring the computing power necessary to alter the blockchain is likely impossible. Additionally, the sheer energy requirement of running enough computers to gain more than 50% of the network is an incredibly tall order. When we consider the type of attack one must execute to control the network and the sheer scale of the network’s computing power, it becomes clear at this point that launching a “51% Attack” would be infeasible and virtually impossible. Although Litecoin and Ethereum are not as powerful as the Bitcoin network, the same fundamental security holds true for all Blockchain based applications.
Nakamoto, S. Bitcoin: A Peer-toPeer Electronic Cash System. Retrieved from: https://bitcoin.org/bitcoin.pdf
TOP500. Performance Development. Retrieved from: https://www.top500.org/statistics/perfdevel/
Bitcoincharts. Bitcoin Network. Retrieved from: https://bitcoincharts.com/bitcoin/
WorldData.info. Energy consumption in Ireland. Retrieved January 03 , 2018 from: https://www.worlddata.info/europe/ireland/energy-consumption.php