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Last Updated : Oct 30, 2018 08:37 PM IST | Source: Moneycontrol.com

How and why blockchain technology is a tough nut to crack for hackers

The blockchain technology fundamentally offers a much more secure way of transacting as its inherent traits of being a decentralized, distributed ledger means attackers cannot target a centralized, vulnerable, singular node.

Moneycontrol Contributor @moneycontrolcom

By Nitin Narkhede

The first six months of 2017 saw more data lost or stolen than through the entire of 2016, standing at 1.9 billion.

Litigation, the cost of repair, a fall in stock prices, a loss in brand value and anxious customers are some of the massive after-effects of a data breach.

Data protection today is one of the most pressing concerns for entrepreneurs and executives all over the world.

All businesses and government authorities worldwide are looking for ways that could make their information systems cent percent hack-proof.

Blockchain technology is what everyone is looking up to.

Furthermore, its consensus mechanism that necessitates validation from the rest of the nodes in a transaction trail makes it almost impossible for hackers to introduce an alien element without being detected.

Let us understand the various elements of the blockchain process to understand exactly why it has been deemed by experts as the future of cybersecurity:

Decentralization of storage: The blockchain networks are completely decentralized with no central administrator. All the nodes participating on the network administer the network collectively.

All data posted is replicated across all the computers (nodes/participants) on the network. By completely doing away with the hierarchies of a centralized authority, it becomes almost impossible to wipe out the decentralized information held within the chain.

Furthermore, it makes the job of hacking extremely difficult. Hackers must put in a significant amount of time and resources to acquire the control of a single database even. Imagine having to do that for hundreds, if not thousands, of different copies of that data!

Consensus Mechanism: Unlike centralized systems where there are a few administrators responsible to validate the authenticity of a data, a blockchain network is a self-regulating infrastructure that involves contribution and agreement of all the participants on the network.

Each block of transaction/data is validated by all the participants before it gets posted on the network.

A fraudulent piece of information can never go unaudited on the network. The blockchain model inherently supports the creation of a peer-to-peer consensus mechanism that transparently ratifies every transaction, informing each element of the network simultaneously.

This feature enhances the authenticity of contracts and agreements.

Strong Encryption Mechanism: Blockchain technology uses a hashing technique called SHA256 to encrypt the data before posting it on the network.

#Hashing is done in such a way that each newly formed block of information carries the address of the previous block. This #hash is designed in such a way that even one single change attempted on any block in the chain would completely change the hash of all the blocks.

Furthermore, even if a hacker manages to change the entry and #function in one database, the rest of the nodes or computers storing the blockchain data will have the original entry to quickly identify the fraud. The hackers can then instantly be barred from operating on the network.

Additionally, a secure hash encryption, private key verification and the simulated testing of software codes underlying blockchain frameworks in white-box situations are expected to add more layers to the already intricate and robust security aspect of the blockchain.

Most importantly, blockchain removes the human factor in cyber transactions completely. Most researchers agree that human errors are one of the integral reasons for the vulnerability of any centralized security architecture.

Password-based frameworks can be hacked into very easily, either because of them being too easy to guess or to steal. The blockchain model, however, uses the expansive nodal network to act as an automatic ratification authority and a huge wall of defense.

In fact, the practical implementation of blockchain-based platforms has already started across domains.

Financial services are testing blockchain for securing payments, extending LOCs’, state governments are in the pilot phase for deploying a land registry on blockchain, healthcare industry is experimenting to securely store and share patient health records using the technology, entertainment industry is exploring blockchain to counter piracy, food supply chains are deploying the technology to track food quality and many more.

Blockchain-A necessity to ensure future cybersecurity

With the advancement in technology and the convergence of everything into Internet-of-Things/AI, the sheer scale of the amount of data generated, and the possible vulnerable points of entry on offer for hackers, will be enormous.

Centralized security mechanisms will fall woefully short of the magnitude at which security would need to be ensured.

In such a scenario, blockchain appears to be the perfect kind of security architecture due to its highly distributed nature. Only the large-scale node-based model of blockchain provides a scope wide enough to include the massive IoT network and the thousands of sensors it incorporates within itself.

Also, from a cost perspective, blockchain will be advantageous for organizations as the costs could be shared and the growth of the model itself enhances security inherently.

The world of cybersecurity has been trying for long to stay one step ahead of the hackers in the cat-and-mouse game of ensuring safe transactions. With blockchain at the helm, it might just race miles ahead.

(The author is founder and CEO, MinersINC, a blockchain-powered P2P entertainment ecosystem built for India)
First Published on Oct 30, 2018 08:36 pm
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