Why is blockchain considered safe and what makes it special? Does this technology have global application? These questions will be addressed in this article. Let’s embark together on this educational journey into the factors that provide security for blockchain.
What is Blockchain?
Firstly, readers are required to understand that blockchain is the distributed ledger technology behind the innovative functionings of cryptocurrency. Its job is to help users transfer digital assets across the world in an efficient, safe and cost-reducing fashion, all in a decentralized manner. This simply means that there are no middlemen or central authority in control of the blockchain system, instead, millions of users, or nodes, help verify the validity of transactions through the consensus algorithm.
In the processes of verifying and confirming transactions, every node receives a copy of the input transaction order for individual validation. When successfully validated, a new block is created to store that transaction’s data in connection with every block beforehand to create an immutably interlinked blockchain system.
It is for this reason that blockchain technology has been recognized as a highly versatile innovation that is applicable to numerous industries worldwide, especially in the financial sector for transfers of value. This is due to the fact that no central authority can intervene with the decentralized state blockchain is in.
Security of Blockchain
In the event of an attempted attack within the blockchain network, the hacker would be required to receive a consensus of at least 51% from the system’s users for their falsely input transactions.
In theory, this sort of attack is called the 51% Attack, wherein attackers attempt to overcome and control a blockchain system with a number of malicious users of at least 51% to cheat the network’s consensus algorithm, which requires over half of the network’s users’ agreed validation.
However, in a practical sense, this theory is incredibly difficult to achieve as overcoming over half of the network would require an immense degree of both commitment and resources, including equipment, hardware and computers. Additionally, an extremely high electricity bill would also need to be taken into account. Therefore, for a successful attack, the malicious attacker would be required to obtain the equipment and pay for the electricity bills of over half of the blockchain network.
Furthermore, blocks in the blockchain are connected to one another though shared portions of information between its previous block, meaning if one block were to be tweaked, all the consecutive blocks before and after it would also require changing, which is nearly impossible.
Cryptography is an integral part of blockchain as it takes regard to encrypting information through the hash function, which creates jumbled and random letters and numbers to indicate various values or information. An encryption method is the SHA-256 function found in the Proof-of-Work algorithm in Bitcoin’s blockchain. Mining in this blockchain requires computing and processing hashed values in the effort of decryption.
Blockchain is the distributed ledger technology supporting the functions of cryptocurrency. It has been recognized to be highly secure and transparent as information is immutable, supporting the initiation of decentralized finance, making it a highly suitable premise for the world’s economic development and application towards numerous industries and fields.