How to Use the Blockchain for Better Cybersecurity

The world is currently undergoing a wave of digitalization. More companies are adopting a paperless system. Traditional employees are shifting to remote working setups. People are getting more active online than ever before. A lot of people believe that it’s mainly due to the health crisis that the world is going through. We strongly feel, though, that pandemic or not, our world would have eventually transitioned regardless.

The Threat of Cyber Attacks

Going digital opens a world of convenience, but it also presents a new challenge: preventing cyber attacks. According to an article published by IBM, cyber-attacks can cost companies almost $500 billion annually.

Even worse, most of these incidents can still go undetected despite most of our best efforts. Want to learn how to save failing business in this digital age? Then cybersecurity must be at the top of your priority. This is where blockchains enter the picture.

What Is a Blockchain?

In a nutshell, a blockchain is a system of storing and recording digital information by creating a chain of connected transactions that are duplicated and disseminated across a vast network of computer systems.

Doing so allows each user to double-check the veracity of the data stored and who made the data input.

For added security, the process also involves a system of three keys (public, private, and receiver keys), combined with advanced cryptography techniques.

How Does It Work?

A blockchain works in three steps and is reliant on three main elements, both of which we’re going to talk about below.

The Steps

  1. A block is made. Each step made in a blockchain is referred to as a “block” of information. It could be any information you have recorded, a transaction that was made, or any recognized digital action.
  2. The block becomes a link. This block then gets connected to the previous blocks before it, in chronological order. These connections will then be recorded not by a central system but by a network, making sure that everything is accurate and secure.
  1. The chain is made. Finally, these links make up an irreversible chain of records known as a blockchain. This will make records tamper-evident drastically decreasing the possibility of an undetected malicious attack.

The Elements

This three-step system wouldn’t work without the following elements:

  1. Distributed Ledger Technology. A chain of digital information cannot be considered as a blockchain if it relies on a single, central system. They have to be distributed among a network of computers.
  1. Immutable Records. Another major factor that separates blockchains apart from other systems is the absolute rule of immutable recording. This means that each action is permanently recorded. What if you’ve made an error and you have to amend a particular record? Then you simply need to make a new record stating the changes that you want to make to the previous one. Both records will remain in the system, each connected to their own respective chains.
  1. Smart Contracts. Finally, you can also create “contracts” or a specific set of rules depending on your needs and preferences. After all, blockchains are now being used in various sectors and industries including government offices, communication companies, and healthcare establishments just to name a few.

The Benefits of Using Blockchains

Anyway, now that we understand how a blockchain works, we can move on to further discuss the pros and cons of using it.

  • Transparency. The first aspect that we like about using blockchains is the transparency that it brings. It motivates users to be more responsible with each entry created since they know they’ll be held accountable for it.
  • Traceability. Running a business that requires strict tallies of information? Then you will definitely find the increased traceability provided by blockchains helpful. A blockchain makes it easier to track inaccuracies and amend records without the need to change multiple records along the way.
  • Security. Finally, most users use blockchains simply for the security it brings. It is currently the most secure system of recording and storing information online. This is also the reason behind the increased demand for it across industries.

The Risks of Using Public Blockchains

  • Potential Loss. As mentioned above, blockchains can be used and accessed by using keys, one of which is the private key owned by individual users. This adds to the security of the overall system. However, it can also be the cause of potential loss. After all, losing your key can lock you out of the systemーand if you’re using that system to hold your money, then that might mean losing access to that money forever.
  • Storage. Blockchains obviously require a lot of storage. The more you use it, the bigger your system will grow and the higher storage capacity it will require. This means that it will require quite an investment to maintain if you want to prevent losing valuable data in the long run.
  • Biased Security. Finally, let us talk about a risk that users can easily overlook. Blockchains are only efficient because their records are distributed in a system of computers…but what happens if one particular user or party owns more than 50% of these computers? This can potentially allow a biased exclusion or modification of transactions and records. This will require a significant amount of resources, and no one has succeeded in an attack using this method at the time of writing this article, but that doesn’t mean that it can’t theoretically be done.

There is honestly a huge possibility that such an attack might not even happen anymore given the advancements happening in blockchain development. We simply seek to give you a more complete overview of what you can expect when using blockchains for better cybersecurity.

The Future of Blockchain Technology

Speaking of what to expect, here are three trends that experts predict in the future of blockchain technology:

  1. Interconnectivity. While we are probably still years away from industry-wide blockchain networks, there is definitely a lot of work being devoted to interoperability and network merging. This seeks to build more room for expansions as growing networks near critical levels of data storage.
  1. Increased Validation Tools. Fraudulent data sources remain one of the most pressing concerns when it comes to blockchain usage. Hence, we can all expect more dependable validation tools to prevent not just potential fraudulent records but erroneous entries.
  2. Leveraging Adjacent Technologies. Lastly, we can expect developers to explore more adjacent technologies to integrate with blockchain systems, creating a more efficient and secure digital ecosystem hopefully in the near future.

To Sum up

As the world gets more and more digitized, it is no surprise that cyberattacks also get more brazen and problematic. Hence, it’s no wonder why technologies like blockchains that seek to increase cybersecurity are also in high demand.

Blockchain is a process of storing and recording interlinked information using a network of computer systems. This makes it easier for users to track each entry made in the platform while efficiently making it impossible for malicious attackers to hack into it unnoticed.

Using blockchains has its own pros and cons. Some of the benefits include transparency and increased user accountability. On the flip side, though, it will require a significant amount of storage that can prove to be quite costly.

Lastly, please keep in mind that blockchain is an ever-growing technology that we can still expect to develop in leaps and bounds in the near future.

Lavanya Rathnam

Lavanya Rathnam is an experienced technology, finance, and compliance writer. She combines her keen understanding of regulatory frameworks and industry best practices with exemplary writing skills to communicate complex concepts of Governance, Risk, and Compliance (GRC) in clear and accessible language. Lavanya specializes in creating informative and engaging content that educates and empowers readers to make informed decisions. She also works with different companies in the Web 3.0, blockchain, fintech, and EV industries to assess their products’ compliance with evolving regulations and standards.

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