Essential for maintaining a decentralized record of transactions, you may have heard about Blockchains due to their close link with cryptocurrency and NFTs. So, what exactly are they and how good is its cyberprotection?
Blockchain databases store digital information, usually records of transactions. They connect across multiple computers and linked through peer-to-peer networks.
The transaction process for a blockchain looks like this:
- A new transaction enters
- The transaction travels to the worldwide network of computers
- The network solves equations to validate the transaction
- The system groups information together into blocks
- Blocks full of information are chained together
- The transaction is complete
There are many benefits when it comes to blockchains, but three in particular are key factors to focus on.
There are benefits of a peer-to-peer computer system, as opposed to a centralized system like a server farm. It protects the integrity of the system. Adding another layer of cyberprotection.
A fire, power surge, or even a disgruntled employee may cause widespread and irreparable damage to a centralized system. Due to information storing across multiple computers at several locations, blockchains protect themselves from catastrophic failure.
Information inside a blockchain system can not change. When a block is filled, it is added to the chain and gives an exact time stamp. In the extremely unlikely event that someone alters a single block, the rest of the system is unaffected.
Why is it extremely unlikely? Blockchains use something called cryptographic hashes to encrypt its data. Basically, information goes in, and a unique string of numbers and letters called a checksum comes out. This checksum is complex and nearly impossible to reverse engineer.
Finally, if someone does manage to alter a block, that block is removed, and the chain is broken. This makes alterations to the blockchain easily identifiable and things like Malware less effective.
Blockchains (for the most part) are open-source, meaning anyone may view its code. This means that while individual users are anonymous, transactions within the chain are easily traceable. If currency is stolen, it would be identified the moment it is moved or spent.
The technology, code, and cybersecurity behind blockchains are also open Source. This means anyone can give it an upgrade. If a majority of the users within a chain are happy with the changes, the upgrade can start immediately.
Blockchains aren’t the perfect system. As with everything, there are drawbacks. The most obvious two are speed and cost.
Validating transactions within a blockchain costs processing power. Each transaction has a series of equations to solve. Even in small amounts, this adds up quickly. Bitcoin, for example, uses over $100 worth of electricity for a single transaction. A clearly unsustainable amount.
However, some networks are working to improve. Many are moving to more green energies, like solar and wind power.
The second major drawback is the speed of transactions. This is due to the size and nature of blocks in the chain. Some can have a transactions per second (TPS) rate as low as seven. This issue is slowly resolving and some networks can handle up to 30,000 TPS. However, this is still under half the TPS of credit payment cards like Visa.
No system is unbreachable. Hackers can use things like malware the same way a thief uses a lockpick. However, blockchain cyberprotection is incredibly secure. With continual improvements to the system, they will become even stronger.