What is Blockchain?

When people hear the word blockchain, they may often think of bitcoin or cryptocurrency. This is a common connection that people are likely to make resulting from the impact and popularity bitcoin has accomplished. Blockchain is actually the underlying technology for bitcoin and the many other blockchain technology/products. The term blockchain is commonly defined as a distributed, decentralized, public ledger technology. To simplify this concept, Marco Iansiti and Karim Lakhani from Harvard Business Review broke the concept into a few principles (Iansiti, 2018).

The first principle established from Iansiti and Lakhani is that blockchain is a distributed database. In other words, all parties that are associated with the blockchain have the same access to the entire database. Each block (or person) gets the same info as all other blocks in the chain. Although everyone has the same access, there is no centralized authority or individual that has administrative control of the blockchain content. To further elaborate, blockchain contains two series of software decentralization aspects, politically decentralized and architecturally decentralized (HOLOTESCU, 2018). Political decentralization refers to the fact that there is not a single individual controlling, or centralized authority within the blockchain. Architectural decentralization denotes that the system does not contain a central infrastructural point. This makes it less vulnerable to potential incidents that centralization is historically associated with, which correspond with the next principle.

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The second principle is peer-to-peer transmission. Since blockchain is a distributed network, it consists of nodes, like any electronic device, that a user is running and computing using the blockchain technology (Kharpal, 2018). Thus, all blockchain communication happens directly between all the users/nodes, without the need of a central figure or intermediary.

The third principle is transparency with pseudonymity. The first part of this principle is that the transaction and its content are visible to all users of the network. The other part is each user of the blockchain network has a unique identification. Each user has a set of public and private keys that create a unique digital signature that is used to identify all the parties of a transaction as well as authorized it.(NEED MORE CONTENT)

The last principle is irreversibility of records. As each transaction is time stamped and entered into the blockchain, it’s directly linked to all the corresponding transactions before it. This link established between transactions within the blockchain becomes permanent, chronologically ordered, and is transparent to all the users. These transactions can be any agreement, process, task or payment (all depends on what the purpose of the specific blockchain) which will be transmitted as a digital record and digital signature. This information can be identified, validated, stored, and shared throughout the blockchain network.

Why is security needed and how?

Security is crucial for everyone and it is a must need when dealing with confidential information. “In fact, the threat of cyber-attacks becomes more real every year, as yet another large corporation loses millions of personal financial information – which becomes a very costly proposition once consumers assess the damage and litigate” (Young, 2018). You need to be able to protect the organization from internal and external threats. Internal threats are important because the organization can be held liable for information stolen by employees. As for external threats, computers can receive viruses and a hacker can get into your organizations important files. A few other threats include: dumpster diving, insecure networks, phishing, and vishing. Security is needed to protect all of these different threats towards the organization. These types of security breaches can affect customer relationships and the organization’s reputation as a whole. Not to mention the amount of money the company can lose during these attacks. There are a few different ways in order to maintain the security for an organization which include: antivirus and antimalware programs, the use of a firewall, and by having cybersecurity training for employees. Another important way to maintain the security is by having internal hackers attempt to get into the system so you know what to fix. There have been many cases where companies would have gone bankrupt if they had not implemented the proper security. Overall having a reliable security system can lead to success and give your organization a competitive advantage over your competitors.

Blockchain Security Pros & Cons

Blockchain is a powerful tool that looks as if it could revolutionize the future of cybersecurity for years to come. This is not without merit, as blockchain technology has many advantages that can help organizations to ensure security. According to Holotescu, some of the major advantages are as follows: disintermediation, transparency, and trust (Holotescu 2018). Disintermediation is a term that can be defined as a lack of intermediaries. This means that an interaction between two parties can occur without the need of a third-party certificate authority, or another type of middle-man (Joshi 2017). As you can imagine, disintermediation is enticing for most industries because it ensures that data, and transactions cannot be compromised simply by infiltrating a central organization, which heightens the security of the blockchain overall. Disintermediation is made possible by the fact that blockchain operates as a peer-to-peer network (Miles 2018). When transactions between users are executed in a blockchain they must be verified by various parties in the peer-to-peer network in order to be confirmed. Additionally, all confirmed transactions become immutable, meaning that they cannot be altered or deleted once they occur. This process contributes to the overall transparency of the software and is one of the most attractive advantages to companies that are adopting the technology. Another advantage of blockchain that cannot be understated is trustworthiness (Holotescu 2018). Using a public/private key infrastructure, it can be ensured that transactions being initiated are coming from the valid sources and can only be accessed by the intended recipient. Traditionally for this type of trust, companies would resort to certificate authorities to authenticate the parties in a transaction, while today it can be done nearly instantaneously without resorting to a middleman.

Although blockchain can be very enticing to organizations, it isn’t perfect and comes with flaws of its own. The first issue with blockchain security is that most transactions link users’ inputs and records (provenance data) to their public key. This practice therefore destroys the anonymity of blockchain, because it leaves a trail of historical records that could be used to identify a user. Some companies that have adopted blockchain have been able to combat this problem by identifying users through their public key, which has allowed for further anonymity. In addition to anonymity, companies wanting to adopt blockchain also need to consider the concerns of scalability that surround the technology. The next two challenges are direct issues for organizations that want to utilize Blockchain for security purposes. If the technology is being used for an organization’s security, it will need to serve many employees at once, and will need to constantly change to combat threats (Salman 2018). Some industries currently see an influx of more than 2000 transactions per second. The issue is that one “block” in a blockchain can only handle up to 7 transactions per second (Siba 2016). As you can see this would require many blocks to keep up with an organization’s transaction requirements, leading to constantly increasing storage demands. Timing is another concern surrounding blockchain security, because mining and validation, while fast, still are not instantaneous. In the world of security a few seconds could be the difference between being infiltrated or halting a breach (Salman 2018). As discussed with scalability, the ever-increasing volume of transactions require more and more nodes to process them. If more storage is not allocated to the blockchain, each subsequent transaction will slow over time (Blockchain scalability, 2018). One of the ways to combat this problem without adding more storage would be to create a local portion of the blockchain, which can greatly increase processing speeds by not requiring validation from the entire chain. The problem with this method, is that it contradicts one of the main advantages of blockchain security, which is decentralization (Salman 2018).

How can the use of Blockchain change cybersecurity

Disposes of the human factor of authentication

Blockchain seems to be having a significant impact on multiple types of industries including banking, finance, real estate, education social media, and security. One article found that “it offers a totally different approach to storing information, making transactions, performing functions, and establishing trust, which makes it especially suitable for environments with high security requirements and mutually unknown actors” (Barzilay, 2017, para. 2). As the benefits of blockchain become more apparent and understood. Blockchain will be used to solve security issues within cybersecurity today. “A blockchain is basically a decentralized, digitized, public ledger of all cryptocurrency transactions and uses what is known as the Distributed Ledger Technology” (Ravindra, 2018, para. 3). A way to halt future fraud actions or locate tampering of data without permission. Blockchain also disposes of the human factor from authentication between parties. Simple passwords created by employees and customers are one of the biggest weaknesses of current practices in cybersecurity. No matter how much money an organization invests in security, all these efforts go in vain if the employees and customers use passwords that are easy to steal or crack (Ravindra, 2018).

Traceability

Blockchain is also extremely useful by documenting data through timestamps and digital signatures. Allowing companies to trace back past transactions or locate certain parties within the blockchain. This blockchain’s functionality increases the system’s reliability as every transaction is associated cryptographically to a user (Ravindra, 2018).

Decentralized Storage

Users of blockchain can maintain their data by utilizing decentralized storage. For instance, if someone who is not the owner of a component of data (such as an attacker) attempts to tamper with a block, the entire system examines each and every data block to locate the one that differs from the rest (Ravindra, 2018). If found, the blockchain will ignore the block registering it as “False”. This feature of storing and maintaining data is an essential part of preventing existing data from being removed and false data from being implemented. In the same way that technology allows for digital marketplaces to operate without assigning market power to a single platform operator, it also enables secure transactions and sharing of data without the creation of a single point of failure or a large repository of personal and sensitive data (Catalini, 2018). Being able to provide improved security and survivability in case of a breach of access which is still very unlikely. With most service providers on the internet being centralized, inputting blockchain into a company to be more decentralized improving resistance to possible hacks or outages in the future from causing serious issues for the company. When a hack does occur, the decentralization of records acts as a crowd control limiting how easy it is for the hacker to access multiple records becoming increasingly harder to access each additional record. Although technology may help fill part of this gap with decentralized exchanges (Ox, EtherDelta, Omega One) and hardware wallets (Ledger, Trezor), consumers will still gravitate toward centralized services until the decentralized ones are able to match them in speed, ease of use, and other features (Catalini, 2018). Blockchain becomes an increasingly successful tool for cybersecurity by addressing human flaws being one of the primary issues when it comes to security. Providing the users with increased privacy, encryption, limiting potential risks of security breach, and building trust between both parties.

The Future of Blockchain

Blockchain will have many uses in the future. With advancements in technology, people will find blockchain easier to use and find more uses to benefit their needs. Blockchain uses will include: e-commerce, global payments, remittance, P2P lending, microfinance, healthcare, title records, ownership, voting, intellectual property, derivatives, crowdfunding, debt, private markets, equity, escrow, wagers, and digital rights. These uses of blockchain will change how we do things from day to day. According to Redka, there are many individuals living in underdeveloped countries without access to banking services. Blockchain technology can help solve this problem, as it can provide access to transactions and end the need for a physical infrastructure (Redka, 2018). With some countries currently making blockchain technology harder to utilize, uses in banking services may allow for other countries to take advantage of the technology. Redka explains that current developing nations are stuck with poorly operated government bodies, bureaucracy, ancient record keeping systems, and corruption (Redka, 2018). Blockchain would allow for these barriers to loosen and create a smoother transition. According to Comm, the blockchain is ideal for keeping track of currency and protecting it against fraud (Comm, 2018). Security concerns make the future of blockchain an important concept to continue to invest in. If blockchain allows for better control of fraud and our currency, then security could focus on other issues in keeping our world secure. Risks with blockchain in the future include affordable communication and computer systems, global regulation issues, and social and economic impacts (Redka, 2018). Future research into blockchain technology is another popular topic for the evolution of blockchain. According to Yli-Huumo et al, blockchain research will focus primarily on security and distributed system literature. Understanding what to research will help develop blockchain technology continue to grow (Yli-Huumo, Ko, Choi, Park, & Smolander 2016).

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  2. Joshi, N. (2017, October 21). We’re in the age of disintermediation – the reason is blockchain. Retrieved November 27, 2018, from https://www.allerin.com/blog/were-in-the-age-of-disintermediation-the-reason-is-blockchain
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