Is Blockchain Safe? Detailed Analysis!

When it comes to technology, no topic gets as much buzz as blockchain. You might have heard your friends talking about it or seen a news headline about it. Even if you don’t know much about this new-fangled technology, you would be able to tell that blockchain has something to do with money and cyber security. From an article you read or a conversation you overheard, you probably know blockchain technology has something to do with protecting transactions from hackers and cybercriminals. But is blockchain safe? Let’s find out.

What is Blockchain?

Let’s start with the basics. Blockchain is a new type of "database" that stores data in “blocks” and links them to one another with “chains”. Although this may sound a bit like gibberish at first, it makes you understand how it works. The easiest way to understand blockchain is to think about how we currently store data and how blockchain technology is different. Today, data is usually stored on central servers at a single location. If one of these servers gets hacked, or someone breaks into the building where they are stored, then the entire database is compromised. If one record is changed, then the rest of the information will be affected. Blockchain, on the other hand, stores data across millions of servers and keeps them in sync. If one of these servers gets hacked or someone breaks into one of the locations, they will only be able to access that single server and nothing more. Even if they can break into one server, they won’t be able to get into any of the others. Each block of data is encrypted, and the key required to decrypt that data is stored on a different server.

Is Blockchain Safe?

The short answer is Yes, blockchain is safe, but this doesn’t mean that it’s 100% impenetrable. The data stored in the blockchain cannot be altered or deleted;Also, the data is stored across millions of computers and each computer has an identical copy of the blockchain database. If one of these computers gets hacked or someone breaks into one of the data centers, they will only be able to access that single computer and nothing more. Unlike centralized databases, where all the data is stored in a single location, blockchain’s decentralized nature makes it very difficult for hackers to breach the system.

How Does Blockchain Make Transactions Secure?

The truth is, blockchain technology doesn’t protect transactions from fraud. Rather, it protects them from alteration. Let’s say you are selling a product using a blockchain-based platform. Once the transaction has been completed and the order has been verified, the transaction will be recorded in the blockchain. No one can tamper with that transaction and no one can delete it. Once the transaction has been recorded in the blockchain, it can never be altered or deleted. You can think of it as a permanent record. Another important feature of blockchain is that it is decentralized. Each blockchain network has millions of nodes that store a copy of the entire database and keep it updated. Every time someone makes a transaction, that transaction is verified by the other nodes on the blockchain network. If someone attempts to make a fraudulent transaction, the other nodes will detect it and reject the request. If someone attempts to make a fraudulent transaction, that transaction will be rejected by the other nodes on the blockchain network. Essentially, blockchain will assume that that transaction was made by an imposter.

Limitations of Blockchain

Although blockchain technology is the most secure and efficient way to store data, it is not impenetrable. Blockchain is safe because the data is stored across millions of computers and each computer has an identical copy of the database. If one of these computers gets hacked or someone breaks into one of the data centers, they will only be able to access that single computer and nothing more. Unlike centralized databases, where all the data is stored in a single location, blockchain’s decentralized nature makes it very difficult for hackers to breach the system. The only way to hack a blockchain is to hack each of the millions of computers that are part of the network. This is almost impossible given the current state of technology and the computing resources required to do so. Another limitation of blockchain is that it is slower than centralized databases. This is because every transaction has to be verified by the computers on the network. It also means that blockchain is not scalable. Given the current state of technology, it is almost impossible to increase the capacity of blockchain.

?

Top Blockchain Security Issues

1. Lack of Standardization In Smart Contracts

A blockchain is essentially an unbreakable ledger that keeps track of data and transactional information. It is used to store information on various entities and their activities. The information is then encrypted and saved on a distributed ledger, making it unbreakable. However, a lack of standardization in smart contracts is one of the most common security issues on blockchain. This is a problem because it makes the data saved on distributed ledgers unreadable. This means that the data can't be read and interpreted properly and be used for its intended purpose. This issue is common and usually happens when a programmer writes code that is not compatible with other code on the blockchain. This can cause the system to crash and cause a lot of problems.

2. Unsecured Supply Chains

This is another dangerous security issue on the blockchain. If a blockchain does not have proper security, it can cause problems for the whole system. It can result in cyber-attacks that can harm businesses and users. A blockchain system must be designed to be fully secure from the inside out. This means that the system needs to be secure enough to prevent outside attacks and unsecured supply chains. This can cause the system to go down, resulting in data loss. If a business’s supply chain is not secure enough, it can cause a lot of issues along the way. It could get hacked, be attacked by malicious software, or experience operational delays.

3. 51% of Attacks

A 51% attack could be the most dangerous threat to the blockchain industry as a whole. These attacks can happen at any point along the chain, and 51% of them do not affect commercial or private blockchains. A 51% attack occurs when one person or organization (malicious actors) controls more than half of the hash rate, which can be disastrous. Hackers can alter the course of business and prevent approval. They can redo previously completed transactions, resulting in double spending.

4. Routing Attacks

Routing attacks are the next key problem for blockchain technology's security and privacy. The real-time flow of enormous amounts of data is essential to a blockchain network and application. Hackers can use an account's anonymity to intercept data as it is transmitted to internet service providers. When a routing attack occurs, blockchain participants are typically ignorant of the vulnerability because data transmission and operations continue as usual. These attacks offer the risk of exposing private data or extracting currency without the user's knowledge.

?

5. Phishing Attacks

Phishing attacks on blockchain networks are becoming more common, causing major issues. The most common targets of phishing attacks are individuals or company personnel. The purpose of a phishing attack is for a hacker to gain user credentials. They can send a proper email to the wallet key's owner. The user must submit their login details via the included bogus hyperlink. Access to user passwords and other sensitive data can be harmful to both the user and the blockchain network. They are also susceptible to various types of attacks.

Final Words

One thing is for sure, blockchain is not a fully-automated, impenetrable system. It is not a fail-safe mechanism either. What it does is protect transaction data from alteration and deletion. That said, it does not protect against fraud. It does not stop someone from stealing the money in your wallet. It does not stop someone from transferring funds to an account that they control. It does not stop someone from creating a fake identity and using that identity to open an account using false documents. It does not stop someone from providing false information in a financial declaration. In short, Don’t assume blockchain is impenetrable. It isn’t. Be mindful of its limitations and don’t rely on it as the only protection against fraud.

?