This is a Guest Post by Gary Spence, CEO of Yotta Laboratories.
Blockchain was initially created to foster trust between online users and have them share highly confidential and valuable data in a secure platform. Blockchains are quite capable of defending themselves, using advanced mathematical algorithms and the latest security software to keep prying eyes from accessing data contained within.
Let’s get a bit deeper on how blockchains work in securing your data. Take Bitcoin, for example. Bitcoin is based on blockchain technology that makes use of an accounting ledger. The ledger contains each and every transaction that was ever made, and there are multiple copies of it in a given computer network (called nodes).
Each time a user tries to make a transaction, the accounting ledger is brought up to make sure that it’s valid and that the user really has Bitcoin to spend. Once verified, the subset sends out the completed transaction in the form of a “block”, which gets added to the virtual ledger.
Miners are online users who maintain these nodes. They get paid Bitcoins whenever a new block has been successfully added to the chain.
In a sense, the blockchain system is considered tamper-proof because of two reasons. One, each block contains a unique cryptographic fingerprint, and two, there’s a consensus protocol, a system where nodes are interconnected, giving each node full access to the transaction history.
In reality though, blockchain is still far from being totally immutable.
No system is 100% immutable due to the fact that all networks can be modified at any given point. But blockchain technology has the advantage over other platforms because of how the nodes, or the network of computers, work with one another.
The immense computing power and the math puzzles one needs to solve make blockchain nearly impossible to modify. To modify a single chain, an individual will need to muster enough power to control at least 51 percent of all the computers in that particular node and make transactional ledger changes in such a short span of time (within 10 minutes or so), which has never happened.
Security and Privacy
Conventional information systems often have a hard time setting up privacy and security simultaneously, but this is not an issue with blockchain. Blockchain technology can solve this problem by maintaining the ledger size and by enabling the public’s key infrastructure confidentiality in order to protect the platform from malicious attackers. Unlike traditional security, blockchain thrives and becomes more secure the larger the scope or scale.
Blockchain has been scrutinized by the public for not having sufficient industry standards, data privacy and complete scalability. Is any of this true?
Even with identity management and a high level of encryption, blockchain transactions can still be viewed by accessing the nodes. Statistical analysis and gathered metadata can be used to discern patterns, and information can be gleaned even if the data is encrypted.
In light of current events, data privacy has become a serious concern. The EU has come up with the GDPR, or General Data Protection Regulation, a law that imposes stricter rules regarding people’s information and how companies use that data.
Invariably, the GDPR poses a challenge for blockchains on both public and private aspects. Among others, the new EU law directly opposes transactional immutability because of the “right to be forgotten” option citizens can exercise.
Ethereum founder Vitalik Buterin has stated that blockchain currently faces a “Scalability Trilemma” involving scalability, security and decentralization.
A distributed ledger system makes use of nodes that store contracts, account balances and transactions. A full node provides better security, but the downside is that true scalability will not be achieved as there are transactions coming in all the time.
Increasing block size may be good for companies who get more transactional volume, but data goes up in large amounts as well. Operating large nodes can only be done by established organizations, which brings to light scalability and decentralization issues.
As of the moment developers are still trying to solve the trilemma. It’s worthy to note that private chains are not subject to scalability issues. What’s more, they are faster when it comes to completing transactions when compared to public chains.
Blockchain developers can work around data privacy concerns by putting personal data off-chain and creating a link pointing to the data using information “hash”, a bit of data that leads individuals to unreadable pieces of information.
The off-chain aspect means that data handlers must know how to store personal data. Sensitive data, such as passports, driver’s licenses and other scanned ID may be stored on off-chain platforms such as applications and standalone databases.
Off-chain storage will mean that both immutability and transparency will be compromised, and there’s a risk of losing personal data or having it stolen by cyber thefts and hackers.
A digital concept called Self-Sovereign Identity is quickly gaining ground as a means to control personal information. In the future, when blockchain has become an integral part of institutions, businesses and systems, owners will need to follow regulations while maximizing balance and synergy to beat the competition and preserve data privacy.
Encrypted blockchain is secure when the keys are safe. In a sense, they are more secure than any centralized system in the world.
(The potential of Blockchain)
Two major Australian banks have now integrated blockchain technology in their bank guarantees concerning commercial property leasing. The guarantee is based on a single source of information, ensuring higher efficiency and a lower risk of fraud.
Blockchain can be used to prevent the occurrence of cybercrimes. Any attempt to change data can lead to instantaneous alerts. As blockchain’s ability to fight crime becomes apparent, there will be more governments and agencies who will want to sign up.
Lockheed Martin, a US defence contractor, is now using blockchain technology in their software development, supply-chain risk and systems engineering. Indian states are considering adapting blockchain to improve cybersecurity and information efficiency. Andhra Pradesh has partnered up with Swiss-based company WiseKey International to protect the citizens private data.
AID: Tech, an Irish company became world’s first in delivering aid to refugees using blockchain technology.
To conclude, blockchain technology can be private, secure, robust and trustworthy. Is blockchain flawless? No. Do the benefits of using it outweigh the risks? Absolutely, providing it is executed correctly.
Any system can have vulnerabilities which means that now more than ever, digital products and services need to be created with cybersecurity and data privacy in mind from the outset.
Author Bio: Gary Spence is CEO of Yotta Laboratories. He is a Chief Architect of Distributed Ledger Technology (DLT) and a Digital Technology Specialist. Spence’s ambition is to take business technology to its next level, therefore, creating efficient savings of time and expenditure.
Spence has an extensive and unique skill set with experience in Blockchain protocol details, transactions, mining, and consensus. He also has smart contract developmental experience with Eris/Ethereum/Blockapps and experience with Distributed Storage Technology, Misys TI+/TradePortal Java, JEE Twisted Python, DB2, MS SQL, Oracle, XML, CSS, JSP, HTML, web development frameworks, JMS, Web Services and Tomcat Java Web Start, IBM, WebSphere, log4j.
Spence’s vision is to build reusable modular core libraries for use across a line of multiple products, creating a full ecosystem.