Pros & Cons for Trending Usage in Blockchain Technology in Cybersecurity

Do you know that blockchain can strengthen the security of your solutions? Potential blockchain technology is promising for securing data, communications and entire systems. However, the cybersecurity capability of blockchain comes at a fixed cost. In this article, we take a closer look at the core principles of blockchain security and analyze the potential impact of blockchain on the cybersecurity of various solutions. We also overview key industries that already use blockchain for cybersecurity.

What is Blockchain Technology?

A blockchain is a decentralized ledger that contains data about all transactions performed on a peer-to-peer network. Transactions are recorded over time and are grouped into back-linked blocks that are cryptographically secured and arranged in chains. The transaction data contained in these blocks are immutable, due to which it can be considered reliable and secure. Blockchain technology allows all blockchain network users to view any transaction done by anyone on the network.

Types of Blockchain Network

There are three common types of blockchain network architecture:

Public Architecture without Permission

This includes networks that work with untrusted members, such as Bitcoin and Ethereum.

Public Architecture with Permitted Access

This includes networks that only deal with trusted members, such as Ripple.

Private Architecture with Permitted Access

This includes networks that are open only to trusted members of a defined community, such as bankchain and fiberchain.

According to Forrester's predictions, a licensed blockchain would be a safer and prudent option than an unlicensed blockchain, as the latter creates much greater compliance concerns. Companies that want to benefit by using blockchain technology can primarily build a custom private blockchain. In addition, using the public blockchain network for their specific needs, it can be partially adapted. In any case, they will be able to take advantage of the key benefits of blockchain for cybersecurity, which we are discussing below.

Essential Factors of Blockchain Security

A blockchain is by nature distributed and replicable. It uses the consensus of the participants and the latest achievements in cryptography. As a result, blockchain-based solutions are more resistant to cyber attack than non-blockchain systems. The security of blockchain technology depends on three basic elements:

Furtiveness

The blockchain provides extensive capabilities to ensure user anonymity. Generally user keys are the only link between the users and their particular data. However, it is also easy to anonymize these keys. Some networks also use non-interactive zero-knowledge evidence (zk-SNARK, zk-STARK, and so on) to maximize users' privacy. As a result, a blockchain allows users to maintain unprecedented levels of anonymity, while providing rich opportunities to open and track transactions.

Data Integrity

The blockchain is designed as a laser where each block is connected to a nearby block using a cryptographic hash function. Therefore, once a transaction is entered on the blockchain, it cannot be changed or deleted. Any changes to previously recorded data are processed as new transactions.

Availability

Having a large number of nodes ensures blockchain flexibility even when some nodes are unavailable. And as each node in the network has a copy of the distributed ledger, the right blockchain remains accessible to other peers even in the case of a compromised node.

With the aim of adding all these features to their software products, organizations focus their attention on blockchain-based solutions. However, the technical complexity of blockchain technology gives rise to some concerns regarding its implementation and stability. In the next part, we will overview the major benefits and drawbacks of using blockchain technology for cyber security.

Cybersecurity Using Blockchain for Pros and Cons

Blockchain has immense potential as a cybersecurity measure, this technology is also associated with many risks. Let's consider the major drawbacks of the blockchain before deciding to strengthen the security of your solution with this technology, which you need to keep in mind:

Scalability Challenges

Blockchain networks have different limitations, such as the block volume and the number of transactions processed per second. Therefore, you need to check the scalability of the blockchain platform that you want to use as the basis for your solution. For bitcoin, these limits are currently up to 1 MB of data and up to 7 transactions (TPS) per second. On the Ethereum network, block generation is limited to 7 to 15 TPS. Other networks, however, claim to have very high transaction capacity. For example, Ontology claims to reach 4,000 to 12,000 TPS depending on the environment, while the Future Pia network measures up to 300,000 TPS in laboratory testing.

Trust on Private Keys

Blockchain relies on the use of private keys: long sequences of random numbers generated automatically by a wallet. Private keys are used to interact with the blockchain and, unlike user passwords, cannot be restored. If a user loses their private key, it will be impossible to recover all the data encrypted with it.

Adaptability Challenges

Although Blockchain Technology can be implemented in almost any business, companies may face difficulties integrating it. For example, employing this technique in supply chain systems is quite challenging, as it can take longer to re-implement supply chain logic using blockchain. Blockchain applications may also require complete replacement of existing systems, so companies should consider this before implementing blockchain technology.

Cyber Attack Threat

Blockchain Technology greatly reduces the risk of malicious intervention, but it is still not a panacea for all cyber threats. It also has weak locations in the blockchain, such as node communication (eclipse attack), consensus mechanism (51% attack), and code vulnerabilities. If attackers manage to exploit any of these vulnerabilities, it can put the security of the entire system at risk.

High Operating & Optimization Costs

A blockchain requires sufficient computing power and storage capacity. This can lead to higher marginal costs than existing non-blockchain systems.

Blockchain Literacy

Despite the increasing popularity of blockchain solutions, there are still not enough qualified blockchain developers and cryptography specialists. Blockchain technology requires massive skills and rich knowledge through various technologies, programming languages and tools to achieve development.

Lack of Governance

The operation and use of blockchain technology in general and distributed ledgers in particular, are not well regulated globally. Many countries, including Malta and the US, already have been working on cryptocurrency regulations. Several states in the US have also established frameworks regulating the legal and commercial use of blockchain and smart contracts.

These are the main blockchain drawbacks that you need to keep in mind when deciding to implement this technology to improve the cybersecurity of your product. However, the final scope of potential losses will change depending on the industry in which you work and the additional tasks you want to solve with the help of blockchain.

Key Benefits of Using Blockchain for Cybersecurity

There are several major benefits of using blockchain for cybersecurity, let's take a closer look at its benefits:

Secure Data Storage & Processing

Blockchain records are immutable and any changes recorded on the blockchain are transparent and non-removable. Therefore, data stored on the blockchain is better protected than traditional digital or paper-based records.

Secure Data Transfer

Blockchain enables fast and secure transactions of data and finance. Features such as smart contracts allow the automatic execution of agreements between multiple parties.

Not Single Point of Failure

Permissible blockchain systems are decentralized and, therefore, more flexible than traditional systems. The compromise of a single node will not affect the operation or security of the entire blockchain. This means that even in the case of DDoS attacks, the system will function as a normal thanks to multiple copies of bookkeeping. However, private blockchains cannot give you this benefit.

Data Transparency & Traceability

All transactions on the blockchain are digitally signed and time-stamped, so network users can easily trace transaction history and track accounts at any historical moment. This feature also allows a company to have valid information about property or product distribution.

User Confidentiality 

Blockchain network participants have higher privacy due to public key cryptography that authenticates users. However, some blockchain-based startups go a step further and periodically make changes according to the blockchain to improve this technology. For example, Blockchain developed a Keyless Signature Infrastructure (KSI) that allows users to verify the validity of their signature without disclosing the keys.

Increased Customer Confidence

A blockchain provides data privacy and transparency that can help businesses gain customer confidence. In addition, in many blockchain networks today, data owners can be given complete control over their personal data and decide who can access it and when.

Impact of Using Blockchain for Cybersecurity

With the help of blockchain technology, many industries can benefit the most by improving the cybersecurity of their products. Blockchain due to its nature provides promising cybersecurity options for startups and enterprises working in various fields. The list of areas that are most likely to benefit from implementing blockchain for cybersecurity include the following:

Finance Industry

In the financial sector, the biggest value of blockchain is its data immutability and transaction transparency. Storing transactions on the blockchain is considered more transparent and secure than traditional digital or paper record keeping. Some banking organizations, such as ING Group, use blockchain and specifically zero-knowledge range-proof solutions to protect the confidentiality of customer information. A virtual banking platform, blockchain and machine learning are used to strengthen user data security.

Smart contracts introduced by many blockchain networks allow the automatic execution of agreements between multiple parties when all the terms of these agreements are met. Common examples of such agreements include both pledge agreements and deposits that are essentially mandatory.

Healthcare Industry

Like the financial sector, healthcare organizations can greatly benefit from using blockchain to securely store and quickly transfer medical data. For example, BurstIQ is a blockchain-based platform that helps health institutions securely store patient data and share it in real-time between various departments and institutions. A blockchain can also help establish secure messaging services for fast and comfortable patient-institution communication on administrative and non-urgent medical matters.

Real Estate Industry

Today's real estate platforms use blockchain to solve two key tasks: ensuring secure data storage and automating key processes such as validating asset ownership and fund transfer. A blockchain allows the ownership and payment history of immutable and transparent assets to be maintained. Streetwire and Shelterzoom use this technology to make data management easier for real estate businesses.

A blockchain also provides reliability and automation, which are critical to the successful operation of real estate businesses. Companies like SMARTRely and Propy take advantage of smart contracts to sell, buy or rent property. Smart contracts ensure fast, secure and fully automated execution of agreements between multiple parties.

Supply Chain Industry

Global giants such as Walmart, BMW and FedEx deploy blockchains to improve data security and operational transparency. A blockchain can store tamper-proof records of all operations, transactions and freight data to simplify the efficiency and operation analysis of the supply chain.

Blockchain platforms can also be used to authenticate assets. According to Gartner, Organizations focus their attention on algorithm-based trust models rather than centralized authorities, and the blockchain can be known as a perfect example of such a model.

In Governance

Blockchains can also be useful to improve the security and transparency of many government processes: tax collection, information administration, elections, and more. The Canadian government owns Cartena, a blockchain-based platform for analyzing Cartena government spending. In the case of elections, blockchain can be used to speed up counting and ensure accuracy of results. Since all data records are immutable, it becomes almost impossible to tamper with electronic votes on the blockchain. However, it can be a challenge to maintain anonymity of the voter's choice while validating his or her identity.

Conclusion

Thanks to reliable data encryption mechanisms, data integrity, network flexibility, and scalability, blockchain offers rich opportunities to maintain a high level of data security. Consequently, switching from a traditional system to a blockchain-based system can prove beneficial for organizations in any industry. But like any revolutionary solution, organizations need to use multiple Must be prepared to deal with deficiencies and complications. The major challenges are dependence on private keys, issues of adaptability, and lack of expertise.

Winklix has a dedicated team of highly capable blockchain developers who know all aspects of this promising technology. Get in touch with us and we'll be happy to help you convert your blockchain-related idea into a real-life product.