The Blockchain Network is said to be the safest transaction system the world has ever had. It has played an important role in changing how we view the financial industry. But recently, critics have suggested that blockchain-based transactions might not be as secure as we have been made to believe. Below, we will share important information about how safe blockchain technology is.
Blockchain & How It Works
Blockchain system is a digital system that makes use of cryptographic blocks to take note of and store important information about valid transactions that have been made using the system. It has a close relationship with digital currencies such as Ethereum, Bitcoin, etc. to a large scale.
Note that blockchain is more than just a digital platform for carrying out transactions and storing data. The system can also be used to store medical records, automate smart contracts, and store different data types. Blockchain has helped reduce corruption in elections.
Why Blockchain Is Believed To Be Safe
In simple terms, blockchain is more of stored data blocks, and each one of them contains a link to the previous block and a unique hash number. Each block is needed because they are an integral part of the record sequence and are impossible to change since the hash number will change, indicating that the altered block is no longer valid. This is the main reason blockchains are considered secure. There are also some aspects we will talk about below.
Each of the blocks operates via a consensus system that helps to show that a transaction has been done and that it is legitimate. Main consensus protocols encompass proof-of-stake, proof-of-work, and proof of authority. The primary rule that is used to ensure immutability via consensus is known as the lengthiest chain rule. It states that each time there are two conflicting versions of a given block, the one that is followed by the longest sequence is considered the legitimate one.
Cryptography also helps secure transactions done through the blockchain. All transactions are given private keys, and can also be verified using a public key. In case the information about the transaction changes, the signature will automatically become invalid. When this happens, that particular block is ignored and will not be included in the chain.
There are many blockchain networks, and most of them are decentralized. It is impossible to corrupt a system without any point of failure. This is because even if a small section of the system is hacked, the rest will not be affected.
But this is an advantage that is somewhat lost in private blockchains. They do not have enough odes and one point of control that regulates who is able to change the ledger. They are also known as centralized and work like blockchains used by corporations for internal purposes. By doing this, companies can take control of their processes. The good thing with blockchain is that there are zero points of failure, which makes it highly secure.
The Bottom Line
It is vital to note that while the system is perfect for transactions and other uses, it might still have some vulnerabilities. However, we suggest that companies use blockchain since it is currently the safest way to avoid complications related to errors and inaccurate data storage. If you want to learn more about blockchain and how it works, consider following Christian Ellul on social media.