Since the introduction of cryptocurrencies, the world of finance has changed dramatically, and investors are now pouring cash into cryptocurrencies in a range of different ways. This includes buying cryptocurrencies or using cryptocurrencies to invest in items such as limited edition super luxury cars, which increase in value year on year.
Although crypto has been popular, the technology that supports it, blockchain technology, has grown rapidly as many different industries have seen its potential. The graph below indicates how blockchain technology has matured and grown in popularity over the years and how it has been adopted and implemented in many different ways.
How blockchain technology works
Blockchain is typically a database (chain) where data is kept electronically. The database is a collection of information regarding transactions or whatever the use of the blockchain is. It is able to store information with limited access to it without being manipulated or changed. This is what makes sit so attractive, especially for financial and government departments.
The data on a blockchain is stored in groups, also referred to as blocks. The blocks have a certain capacity of storage that they are able to hold. Once the blocks are full, they are chained to other blocks that have been previously filled with information. This holds a chain of data, which is known as ‘blockchain’.
All new information will then be stored on a new block, then attached to the chain. The information is stored in chunks and chained together, making the timeline of activity irreversible and gives its decentralized nature. Once a block is complete and filled, the information is then as good as ‘set in stone’, making it a part of the timeline. Each block is also given an exact timestamp when it is added to the chain for all who can access it. A math function in the technology also creates hash codes, which trunks into a string of letters and numbers. If the information on the chain changes the hash codes, correlate with this, and all changes can be seen.
Is Blockchain secure?
Early on in 2019, a hacker was able to get into Coinbase networks and gain control of a big portion of the network putting its blockchain and transaction under attack. The hacker was able to rewrite the transaction history, diluting one of the biggest blockchain technology attractions.
The hacker altering information made it possible for users to spend the same currency twice, a term is known as ‘double spending’ and could pull off the stunt with what is thought to be up to $1.1million. Since the incident, many other platforms have also seen an increase in hacking. Although no money was stolen from users on this occasion, other platforms haven’t been so lucky, as reflected in the graph below.
There’s no reason to be surprised with the fact that blockchain technology is desirable amongst all users, especially with the integration of blockchain capabilities on some of Samsung’s newest smartphones, which, according to Smartphone Checker, run on high-performance Snapdragon chipset. The fact that is dubbed ‘unhackable’ was, of course, more of a challenge they accepted to be proved wrong. But besides the fact that blockchain technology has some unique security features, it also has vulnerable loopholes that can be fished out if searched for carefully.
Many organizations aim to set up the complex blockchain to prevent hackers from entering. But all trueness, the more complex the system, and the chances of making mistakes create gaps and loops for potential hackers. In order to effectively hack a blockchain, the hacker must hack at least 51% of the chain.
If a hacker were to alter just one single copy, it would not correlate with all the users. So, succeeding in hacking means that they will need to simultaneously hack and control 51% of the blockchain so that their new copy becomes the majority. An attack of this scale would require a huge amount of resources and money in order to redo all the blocks. However, it is not impossible to do.
Besides the 51% hack, there’s also another issue concerning blockchain. Security weakness can also be found in smart contract bugs. A smart contract is a computer system that typically runs on a blockchain network. The system can be used to automate the movement of cryptocurrencies following prescribed rules and conditions. If a bug is found in the contract, it creates a unique sort of emergency that is not as simple to fix as one found in traditional software because transactions, as we know, on a blockchain can not be undone.
A blockchain is a complex ecosystem that makes it vast and full of potential threats. The entire system depends on humans’ actions and interaction, some of who don’t always have the best intentions of using it for its means.
Many hackers have already figured out ways of profiting from hacking blockchain technology on cryptocurrency platforms, which is why moving forward, it is crucial to consider its use and adoption on a mass large scale; there has been much talk about using blockchain for elections, which needs to be reconsidered thoroughly. Efforts to make the process of voting more secure, there a chance it could all go wrong, as we have now seen.