Since we’ve entered the digital age, technological advancements and innovations seem to have become the new normal. Nevertheless, some new technologies still take the world by storm. One of which is a cryptocurrency and its main algorithm to function properly, the blockchain.
If you’re one of the many online users who got intrigued by blockchain technology, read on to better understand how it works. Also, let’s see if this new tech-based method is, indeed, capable of securing your transactions or protecting your data.
Blockchain: The Newest Technological Advancement
Blockchain is a wide-range database. Unlike regular databases, however, it’s structured in a way that all stored data cannot be altered or deleted. Plus, it’s designed to encrypt all data it collates, getting rid of all digital footprints that could be linked back to the owners or users involved in the transactions. Hence, the privacy and security this technology offers are quite promising.
Technically, blockchain algorithms and programming codes are a bit complex. Nevertheless, its developers have managed to simplify access and navigation. Searching, filtering, and acquiring data have all been automated and streamlined.
Blockchain stores and processes data through hashing. Nodes verify every transaction before adding it to the most recent block within the chain, hence the term blockchain. Then through the hash algorithm, the data is converted into a combination of random and unique characters. Hashes generated by the transaction will be combined and processed together until only one hash is left. This final hash is referred to as the root hash.
The blockchain serves as a decentralized distributed ledger that’s distributed across the community. No single party has the authority over this database and no user or node has the power to alter other users’ or nodes’ data. This is why several users opt to switch to blockchain-based service providers – it’s private, it’s convenient, and it’s affordable.
Blockchain Types and Their Security Protocols
Blockchain offers limitless possibilities. It can be used as a data storage, a decentralized network, or a distributed ledger. It’s also great for encrypting data or saving data as a cryptographic signature. In the fos of contracts like Etherium, blockchain can also be used to automatically execute a transaction once the set conditions are met.
Since this technology has initially introduced and launched, several enhancements and innovations have been applied. There’s now a myriad of establishments and businesses that have adopted blockchain technology. Even some private sectors and financial bodies are utilizing this technology to provide safer and more secure services.
To date, there are four main types of blockchains. While all these mainly aim to provide anonymous and efficient data processing, the requirements, protocols, and overall programming vary.
- Public Blockchains
These blockchains are available to anyone. All users from the community can access and validate transactions. These are also referred to as permissionless blockchains as there are no set restrictions on processors.
- Private Blockchains
These blockchains are limited and restricted to certain closed networks. In this method, there’s an entity that controls membership. These are also referred to as permissioned blockchains as these can only be accessed by those who have been granted identities through certificates.
- Consortium Blockchains
These blockchains are semi-decentralized since multiple organizations manage the networks. This setup allows more than one entity to exchange information or execute mining. These are typically used by government agencies and major financial bodies.
- Hybrid Blockchains
These blockchains are combinations of private and public. Adopting both natures, these could have private and permissioned blockchain systems, as well as public and permissionless blockchain systems. This flexible setup enhances both the security and the transparency of the blockchain network.
Cyber Attacks on Blockchain Technologies
Like any other technology, blockchain isn’t 100% safe and secure. Some predators nowadays are specifically targeting blockchain networks, constantly challenging certain vulnerabilities of this young technological development.
Here are some cyber attacks to be wary of in case you opt to utilize blockchains or use blockchain-based networks.
- Phishing: Using well-crafted messages with fake hyperlinks, hackers attempt to lure their targets into providing their credentials, wallet details, and other confidential information.
- Routing: Fraudsters try to intercept data transmissions to acquire sensitive information without the participants knowing.
- Sybil: Using false networks and troll transactions, predators flood the blockchain network in an attempt to crash the system and infect it.
- 51%: Cyber attackers try to attain more than 50% of a network’s mining power to have the ability to control and manipulate the ledger.
Benefits Blockchain Offers; Precautionary Measures You Can Take
One of the greatest features of blockchain technology is its hashing algorithm. While a single data can produce multiple the same number of letters and numbers, there’s no way to un-hash it. Hence, once the block is added to the chain, it’s impossible to be altered or deleted.
Above all, blockchain has proved that users can efficiently execute transactions without the help of any regulating body, a third-party entity, or central authority. Apparently, “processing” fees and “miscellaneous” charges can be avoided altogether, hence, more affordable transactions.
Nevertheless, you need to always proceed with extreme caution when transacting within a blockchain network. Here are some precautionary measures you can take.
- Proofread the receiver’s information before confirming transactions.
- Be selective on who you transact with.
- Never disclose confidential information to anyone.
- Use private networks and trusted platforms.
- As much as possible, don’t connect to a public WiFi when you need to execute any transaction.
- Avoid responding to unknown messages and never click on links from unverified sources.
- Install security tools on your devices such as malware programs and spy apps.
Blockchain technology has already come a long way since it was initially launched, but it still has a long shot when compared to more established and pioneering technologies. So regardless of whether it’s a form of investment, a means of payment, or a source of asset, be responsible and careful enough when opting to utilize blockchain in any way.
Frequently Asked Questions
- How is blockchain so secured?
Blockchain uses a hashing algorithm to convert regular data into a cryptographic format. This technology also makes it impossible to unhash, alter, or delete any verified data that has been converted into a block and added to the chain.
- Where is blockchain data stored?
Blockchain is a decentralized network so there’s no single repository of data. Instead, all data is stored and can be accessed from all systems within the network, also referred to as nodes.
- Can a blockchain be hacked?
Like any other technology, the blockchain network isn’t 100% perfect or secure. It has its fair share of security vulnerabilities and over the past years, there’s several cyberattack cases reported, including phishing, routing, and Sybil attacks.
- How is blockchain beneficial?
Blockchain technology offers privacy and security through its unique hashing algorithm. It can significantly help in managing contracts, verifying transactions, and auditing product origins. It’s a more affordable and quicker way of doing business.