Five Basic Principals Of Blockchain Technology : What Makes Blockchain Different And Secure?
Blockchain, the distributed ledger technology underlying bitcoin, has for more value and not only restrained to the crypto-currency it supports. The security feature DLT offers, has turned all the eyes to it and explore possibilities beyond crypto currency. However, to reap security benefits, it’s necessary to make sure that the initial rules we’re putting in place aren’t setting us up for security problems later on.
To understand the associated security risks in blockchain technology, it’s necessary to know the fundamental principles of the technology.
Here are five basic principles underlying the blockchain technology.
Each participant on a blockchain network has access to the accomplish information and its finish ledger. No single participant controls the information or the data. Each participant will validate the records of its transaction playmates directly, without any third party playmate.
In blockchain communication happens directly inbetween peers rather than on a central server. Every knot stores and share info to any or all alternative knots.
Every activity of knots on network and associated values are visible to anyone with access to the system. Each knot, or user, on a blockchain is digitally signed by a unique 30-plus-character alphanumeric address that identifies it. Users will opt to stay anonymous or give proof of their signature to others. Transactions occur inbetween blockchain addresses.
Once a transaction is posted to blockchain network, the records cannot be tampered. As a result, they’re synced to each transaction record that was posted in past (hence the term “chain”). Various machine algorithms and approaches are enforced to ensure that the storing of the information is permanent, chronologically ordered, and readily available to any or all others on the network.
The digital nature of the ledger means blockchain transactions are often tied to computational logic. Therefore, users will use pre-defined algorithms and rules that mechanically initiate transactions inbetween knots.
Primarily utilized in enterprise markets, private blockchain suggest their operator knots, managing capability over who can read the ledger of verified transactions, who can submit transactions, and who can verify them. The applications for private blockchain incorporate a multiplicity of business transactions during which numerous parties want to participate at the same time however don’t absolutely trust each other. For example, private blockchain systems supporting land records, commodities market, and supply chain management are being tested.
As these systems develop and evolve, may encounter situations that can influence the security of the system and assets it manages or stores.
Taking suitable measures to make security framework sturdy at an early stage mitigates the issue of creating fundamental switches to a product to deal with a security flaw shortly.
Security starts with architecture
One of the key steps to set up a non-public blockchain is designing architecture of the system. Blockchains accomplish consensus on their ledger (the list of verified transactions) through communication. Communication is needed to approve fresh transactions and write them on blockchain. This communication happens inbetween knots, each of them maintains a replica of the ledger and informs the opposite knots of the latest information: freshly submitted or fresh verified transactions. Private blockchain operators can control who is permitted to access a knot. In addition to this, a knot with a lot of connections has advantage to receive information swifter than others. Likewise, knots are also needed to keep up an explicit range of connections to be considered active. A knot that restricts the transmission of information, or transmits incorrect information, is held accountable and can be liquidated from network to keep up the integrity of the system. The underlying assets on a blockchain can grant more-central positions within the network to established trading fucking partners. This would be required to keep up a connection to at least one of those central knots as a security measure to ensure it behaves as expected.
Another security concern within the establishment of network architecture is the way to treat non-interacting or intermittently active knots. Knots could go offline for inappropriate reasons, however the network should be structured to operate in a way (to obtain consensus on previously verified transactions and to decently verify fresh transactions) without the offline knots, and it must be able to quickly bring these knots back up to speed if they come back.
Private blockchain operators therefore should determine a way to resolve the problem of lost identification credentials, notably for systems that manage physical assets. For example, even if nobody would require to prove ownership of a barrel of oil, the barrel needs to reside somewhere. Bitcoin presently provides no recourse for those, who have lost their private keys; similarly, stolen bitcoins are almost unlikely to recover, as transactions submitted with stolen keys seem to a validating knot to be indistinguishable from legitimate transactions.
Private blockchain owners have to take decisions like, under what circumstances, to switch sides a verified transaction, notably if that transaction is proven to be illegitimate. Transaction reversal can undermine confidence in the immutable nature of the system, however a system that permits intensive losses as a results of the exploitation of bugs will result in lost users.
In a private blockchain, operators can opt to permit only certain knots to perform the verification, and these trusted parties would be liable for communicating verified transactions to the rest of the network. The responsibility of granting access to those knots or expanded set of trusted parties is a crucial security decision made by the blockchain system operator.