What is Blockchain?

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

The first principle established by Iansiti and Lakhani is that the blockchain is a distributed database. In other words, all parties associated with the blockchain have the same access to the entire database. Each block (or person) gets the same information as the other blocks in the chain. Although everyone has the same access, no centralized authority or individual has administrative control of the blockchain content. To further elaborate, the blockchain comprises two elements of software decentralization, which are politically decentralized and architecturally decentralized (Holotescu, 2018). Political decentralization refers to the absence of a single individual or centralized authority controlling the blockchain, while architectural decentralization denotes that the system does not contain a central infrastructural point. This makes it less vulnerable to possible incidents historically associated with centralization.

The second principle is peer-to-peer transmission. Since the blockchain is a distributed network, it consists of nodes (any electronic device) that a user runs and computes using the blockchain technology (Kharpal, 2018). All blockchain communication happens directly between all users/nodes, eliminating the need for a central figure or intermediary.

The third principle is transparency with pseudonymity. The first part of this principle is that the transaction and its contents are visible to all users of the network. The other part is that 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. This signature is used to identify all the parties in a transaction as well as to authorize it.

The last principle is the irreversibility of records. Each transaction is timestamped and entered into the blockchain, directly linking it to all the preceding transactions. This link, established between transactions within the blockchain, is permanent, ordered chronologically, and transparent to all users. These transactions can be any agreement, process, task, or payment – depending on the specific purpose of the 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 is a necessity 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). It is essential to protect the organization from internal and external threats. Internal threats are significant because the organization can be held liable for information stolen by employees. Regarding external threats, computers can receive viruses, and a hacker can infiltrate your organization’s critical files. Other threats include dumpster diving, insecure networks, phishing, and vishing. Security is required to defend against all these threats to the organization. These types of security breaches can impact customer relationships and tarnish the organization’s reputation. Not to mention the significant financial losses a company can face during these attacks. There are a few methods to maintain an organization’s security, which include using antivirus and antimalware programs, employing a firewall, and providing cybersecurity training for employees. Another crucial strategy to maintain security is by having internal hackers attempt to breach the system, to identify vulnerabilities that need fixing. There have been numerous cases where companies would have faced bankruptcy if they had not implemented proper security measures. Overall, having a reliable security system can lead to success and confer 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 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 for 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 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 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. 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 its own flaws. The first issue with blockchain security is that most transactions link users’ inputs and records (provenance data) to their public key. This practice consequently 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 simultaneously 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, 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 requires 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: 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, it 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). It is a way to halt future fraudulent actions or locate tampering of data without permission. Blockchain also eliminates 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 for documenting data through timestamps and digital signatures, allowing companies to trace back past transactions or locate certain parties within the blockchain. This blockchain functionality increases the system’s reliability, as every transaction is cryptographically associated with a user (Ravindra, 2018).

Decentralized Storage

Users of blockchain can maintain their data using decentralized storage. For instance, if an unauthorized individual attempts to tamper with a block of data, the entire system scrutinizes each data block to find the one that differs from the rest (Ravindra, 2018). If found, the blockchain classifies and ignores the block as “False”. This feature of storing and maintaining data is essential for preventing the removal of existing data and the insertion of false data. Just as technology enables digital marketplaces to operate without assigning market power to a single platform operator, it also facilitates secure data transactions and sharing without creating a single point of failure or a large repository of personal and sensitive data (Catalini, 2018). Blockchain technology improves security and survival prospects, even in the instance of a highly unlikely breach. Most internet service providers are centralized, but incorporating blockchain into a company can improve resistance to potential future hacks or outages and prevent serious issues for the company. In the event of a hack, the decentralization of records acts as a crowd control measure, making it increasingly difficult for hackers to access multiple records. Although technology may help narrow this gap with decentralized exchanges like Ox, EtherDelta, and Omega One and hardware wallets like Ledger and Trezor, consumers will still be drawn to centralized services until decentralized ones can match them in speed, ease of use, and other features (Catalini, 2018). Blockchain is becoming an increasingly successful tool for cybersecurity by addressing the human flaws, which are often the primary issues concerning security. It provides users with increased privacy, encryption, and limits potential risks of security breaches, thus building trust between 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 discover more ways to benefit their needs. Proposed uses for blockchain 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 will undoubtedly alter how we conduct daily activities.

Redka notes that many individuals in underdeveloped countries lack access to banking services (Redka, 2018). However, blockchain technology could potentially rectify this issue, offering transactional access without the necessity for physical infrastructure. With some countries currently imposing limitations on blockchain technology, its use in banking services may allow countries to fully exploit the technology. Says Redka, many developing nations grapple with ineffective government bodies, bureaucracy, antiquated record-keeping systems, and corruption (Redka, 2018). Blockchain could help eliminate these barriers, facilitating smoother operations.

According to Comm, the blockchain is ideal for tracking currency and safeguarding it against fraud (Comm, 2018). Security issues place a premium on the future of blockchain, making it a key area for investment. If blockchain allows for better control of fraud and our currency, then security can be concentrated on resolving other global security issues. Future risks associated with blockchain include affordable communication and computer systems, global regulation concerns, as well as social and economic impacts (Redka, 2018).

Future research into blockchain technology is another salient topic regarding the evolution of blockchain. Yli-Huumo et al. contend that blockchain research will mainly concentrate on security and distributed system literature (Yli-Huumo, Ko, Choi, Park, & Smolander, 2016). Knowing where to focus research will assist in the continued growth of blockchain technology.

1. Holotescu, C. carmen. holotescu@islavici. r. (2018). Understanding Blockchain Opportunities and Challenges. ELearning & Software for Education, 4, 275–283. https://doi-org.proxy-bloomu.klnpa.org/10.12753/2066-026X-18-253
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
3. Tara Salman, Maede Zolanvari, Aiman Erbad, Raj Jain, & Mohammed Samaka. (2018). Security Services Using Blockchains: A State of the Art Survey. CoRR. Retrieved from http://proxy-bloomu.klnpa.org/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=edsdbl&AN=edsdbl.journals.corr.abs.1810.08735&site=eds-live&scope=site
4. Miles, C. (2018, August 08). Blockchain security: What keeps your transaction data safe? Retrieved November 29, 2018, from https://www.ibm.com/blogs/blockchain/2017/12/blockchain-security-what-keeps-your-transaction-data-safe/
5. Siba, T. K., & Prakash, A. (2016). Block-Chain: An Evolving Technology. Global Journal of Enterprise Information System, 8(4), 29–35. https://doi.org/10.18311/gjeis/2016/15770
6. (2018, April 25). Blockchain Scalability: The Issues, and Proposed Solutions. Retrieved November 25, 2018, from https://medium.com/@bitrewards/blockchain-scalability-the-issues-and-proposed-solutions-2ec2c7ac98f0
7. Iansiti, M., & Lakhani, K. R. (2018, March 06). The Truth About Blockchain. Retrieved November 18, 2018, from https://hbr.org/2017/01/the-truth-about-blockchain
8. Kharpal, A. (2018, June 29). Everything you need to know about the blockchain. Retrieved November 18, 2018, from https://www.cnbc.com/2018/06/18/blockchain-what-is-it-and-how-does-it-work.html
9. HOLOTESCU, C. carmen. holotescu@islavici. r. (2018). Understanding Blockchain Opportunities and Challenges. ELearning & Software for Education, 4, 275–283. https://doi.org/10.12753/2066-026X-18-253
10. Barzilay, O. (2017, November 22). 3 Ways Blockchain Is Revolutionizing Cybersecurity. Retrieved November 27, 2018, from https://www.forbes.com/sites/omribarzilay/2017/08/21/3-ways-blockchain-is-revolutionizing-cybersecurity/#5271b2762334
11. Ravindra, S. (201 8, January 08). The Role of Blockchain in Cybersecurity. Retrieved November 27, 2018, from https://www.infosecurity-magazine.com/next-gen-infosec/blockchain-cybersecurity/
12. Catalini, C. (2018). Blockchain Technology and Cryptocurrencies: Implications for the Digital Economy, Cybersecurity, and Government. Georgetown Journal of International Affairs, 19, 36. Retrieved from http://proxy-bloomu.klnpa.org/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=edo&AN=132026061&site=eds-live&scope=site
13. Redka, M. (2018, September 12). The Future of the Blockchain Technology: Use Cases, Geographical Expansion, Potential Risks and Challenges. Retrieved November 18, 2018, from https://dzone.com/articles/the-future-of-the-blockchain-technology-use-cases
14. Comm, J. (2018, August 06). The Future of Blockchain And Its Potential Impact On Our World. Retrieved November 18, 2018, from https://www.forbes.com/sites/forbescoachescouncil/2018/08/02/the-future-of-blockchain-and-its-potential-impact-on-our-world/#55a63a71f694
15. Young, R. (2018, January 21). Tips for Maintaining Network Security. Retrieved November 18, 2018, from http://trendintech.com/2018/01/21/tips-for-maintaining-network-security
16. Yli-Huumo, J., Ko, D., Choi, S., Park, S., & Smolander, K. (2016). Where Is Current Research on Blockchain Technology?– A Systematic Review. PLoS ONE, 11(10), 1-27 https://doi-org.proxy.bloomu.edu.klnpa.org/10.1371/journal.pone.0163477

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