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For most people who do not know the bitcoin world and other cryptocurrencies well, digital coins and the underlying blockchain technology can really be confusing.
The most common questions include: What's the blockchain? How do you make coins? How does a coin transaction occur? Are the coins volatile?
Then there is the battery of questions related to the underlying security. Write it down in one simple question: you could say: it can be the blockchain violated?
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We will not go into the whole history of cryptocurrencies here, but on a fundamental level, blockchain is an "immutable ledger" technology in which transactions are verified and recorded through a decentralized system.
The idea is that the blockchain keeps the coins and chains of property safer because it is decentralized – in other words, the flow of data takes place "on the edge" of the network and is rigidly encrypted.
In the world of technology there is a consensus that individual user nodes are more or less completely safe – that it is not possible to hack the blockchain directly by assaulting encrypted traffic from a final node.
However, there are various security threats that are taken very seriously by blockchain experts – here are some of the ways security professionals are considering how to "hack the blockchain". (More information on bitcoin and hacking in Hacking Activities Cryptocurrency prices).
Internal threats
Many experts point out that blockchain hacking is not always the result of external malicious actors trying to tap into the system – sometimes it is a case of bad actors who actually take control of the nodes and property shares in a particular blockchain system.
A common example of this is the "Sybil attack" – where someone who has access to multiple nodes can fool the blockchain by establishing false identities.
"A Sybil attack is an attack where a huge number of nodes on a single network are owned by the same party and attempt to disrupt network activity through flooding the network with incorrect transactions or manipulating the 39; forwarding of valid transactions ", writes James Risberg to CoinCentral, specifying this type of theoretical attack.
However, Risberg provides a key disclaimer: coin systems are set up to anticipate Sybils.
"One of the fundamental design decisions made when developing a cryptocurrency system is how to prevent Sybil's attacks," writes Risberg. "Bitcoin prevents them through its job testing algorithm, which requires nodes to spend resources … to receive coins, making it very expensive to own the overwhelming majority of nodes.Many projects manage Sybil resistance differently, but almost they all manage it. "
In fact, blockchain systems are built using detailed proof of work, proof-of-stake and proof-of-ownership algorithms that will clarify whether certain nodes should be trusted and how their inputs should be evaluated. But in general, dishonest and unverified participation in blockchain systems remains one of the biggest security concerns surrounding the blockchain.
The Blockchain ecosystem
There is also the idea that while the decentralized node system has a fairly good security, it is not a good security in all the auxiliary areas where cryptocurrency travels, for example exchange.
"While the security of most cryptocurrencies remains intact, the security of third-party portfolios, exchanges and service accounts around these cryptocurrencies remains almost incredibly bad," writes Risberg. "Millions of millions of dollars of bitcoins and other cryptocurrencies have been stolen from the compromised accounts of individuals and exchanges over the years." (Blockchain is used for more than just cryptocurrencies – find out more in Why data scientists fall in love with Blockchain Technology.)
Beat the Blockchain
Since the blockchain community works to protect and validate blockchain systems, they are going quite dramatically to try to handle unauthorized access or unverifiable activities.
Have a look at the algorithm of the "Byzantine General" delegation – this interesting verification technique is based on metaphors of the past – in particular, the joint actions of various individual generals in battle.
In this type of game theory, experts talk about what results derive from different choices of players – the generals who agree to advance or withdraw – to apply to real problems concerning the use of blockchain.
"In a peer-to-peer system, nodes often replicate data for increased security, availability, etc.", writes Ameya of Medium User in a piece that breaks this kind of approach. "In order to replicate this data, it is important to put this data on unique / distinct nodes, most of which are correct / honest / well behaved nodes, but a local node can not know if the remote node is honest or not. Also, how should a local node know that the same remote node no longer has identity? … the central question is: in the absence of a central authority, a correct node can establish the uniqueness of identities. presented by another remote node? This remote node can be [a] correct node / honest or defective node, ie for the proper functioning of the system, it is not desirable that a remote node is able to present multiple identities. "
The document talks about what happens when consent is not reached.
In many ways, this is the magic word: consent. The lack of consensus ruins the plans of these old generals and burns the ladies' castles – and the lack of consensus is bad for the blockchain participants because it jeopardizes the security and validation of the questions.
In the end, security on the blockchain concerns both the verification of cooperation and the removal of a solitary hacker who clicks into someone's basement. Other examples of concerns are the centralization of bitcoin mining pools in China and other types of centralization problems that may involve less sophisticated property testing algorithms. Experts who look to the consensus on the blockchain have wondered whether consolidating power in the hands of a few wealthy holders could pose a challenge to blockchain systems in the future.
If you are worried about the safety of the blockchain, be vigilant about where your cryptocurrency goes. Search for suppliers and exchanges and find out how to create your safe routes and always keep an eye on volatility, which is also a major source of loss for investors. Regarding the general concept of blockchain security, the fintech community is working very hard to establish better and better systems that will do more to increase the speed, security and convenience of our peer-to-peer financial transactions in a globalized world. .
