The concept of blockchain was initially described by Satoshi Nakamoto, who implemented the technology in the Bitcoin payment system in 2009. Since then, blockchain-based startups have appeared in various industries including banking, education, social media, and security.
Blockchain is the result of many years of research and development in security and cryptography, making it a potentially effective tool in the defence of confidential information.
However, its technological complexity raises some concerns regarding implementation, security, and sustainability. Let’s look closer at the pros and cons of blockchains in the context of cyber security and data protection.
The main advantages of blockchain technology for cyber security are the following:
Thanks to the peer-to-peer network, there’s no need for third-party verification, as any user can see network transactions.
Tracking and tracing
All transactions in blockchains are digitally signed and time-stamped, so network users can easily trace the history of transactions and track accounts at any historical moment. This feature also allows a company to have valid information about assets or product distribution.
The confidentiality of network members is high due to the public-key cryptography that authenticates users and encrypts their transactions. However, some blockchain-based startups go a step further and improve this technology. For instance, Guardtime developed a Keyless Signature Infrastructure (KSI) that allows users to verify their signature validity without disclosing keys.
Right to be forgotten
Data privacy is important even if your information is immutable. As there’s no option to erase unnecessary information, blockchain technology ensures the privacy of your data when you forget a key, as nobody can decrypt it.
In the event of a hack, it’s easy to define malicious behaviour due to the peer-to-peer connections and distributed consensus. As of today, blockchains are considered ‘unhackable’, as attackers can impact a network only by getting control of 51% of the network nodes.
Blockchain technology has no single point of failure, which means that even in the case of DDoS attacks, the system will operate as normal thanks to multiple copies of the ledger.
The distributed ledger ensures the protection of data against modification or destruction. Besides, the technology ensures the authenticity and irreversibility of completed transactions. Encrypted blocks contain immutable data that is resistant to hacking.
The peer-to-peer nature of the technology ensures that the network will operate round-the-clock even if some nodes are offline or under attack. In the event of an attack, a company can make certain nodes redundant and operate as usual.
Blockchain technology can’t improve the quality of your data, but it can guarantee the accuracy and quality of data after it’s encrypted in the blockchain.
Protected network access
Employees may have a need for continuous access to a blockchain from multiple devices, so a company risks losing control over their private keys. In order avoid risks arising from lost keys or human error, REMME’s blockchain provides each user and each device with a specific Secure Sockets Layer certificate that eliminates the need for passwords. This approach makes it impossible to get unauthorised access to the network.
Business correspondence contains sensitive data, which can be effectively protected if you use a blockchain for cyber security. There are many startups that encrypt business communication. For example, Obsidian uses blockchain-based networks to mitigate vulnerabilities in end-to-end-encryption. A distributed ledger for messages reduces the risk of surveillance.
Software programs that are based on the ledger. These programs ensure the execution of contract terms and verify parties. Blockchain technology can significantly increase the security standards for smart contracts, as it minimises the risks of cyber attacks and bugs.
There’s no need to store your sensitive data in one place, as blockchain technology allows you to have multiple copies of your data that are always available to network users.
Increase customer trust
Your clients will trust you more if you can ensure a high level of data security. Moreover, blockchain technology allows you to provide your clients with information about your products and services instantly.
Though the blockchain is changing cyber security, there are still some disadvantages that you should take into account:
There’s a risk that encrypted data may be unrecoverable in case a user loses or forgets the private key necessary to decrypt it.
Each block can contain no more than 1 Mb of data, and a blockchain can handle only 7 transactions per second.
Risk of cyberattacks
Though the technology greatly reduces the risk of malicious intervention, it’s still not a panacea to all cyber threats. If attackers manage to exploit the majority of your network, you may lose your entire database.
Though blockchain technology can be applied to almost any business, companies may face difficulties integrating it. It’s quite challenging to employ this technology in supply chain systems, for instance, as it may take much time to replicate supply chains as blockchains and refine them. Blockchain applications can also require complete replacement of existing systems, so companies should consider this before implementing the blockchain technology.
High operation costs
Running blockchain technology requires substantial computing power, which may lead to high marginal costs in comparison with existing systems.
There are still not enough developers with experience in blockchain technology and with deep knowledge of cryptography.
Overall, blockchain technology is a breakthrough in cyber security, as it can ensure the highest level of data confidentiality, availability, and security. However, the complexity of the technology may cause difficulties with development and real-world use.
Blockchain technology relies on the latest cryptographic achievements as well as comprehensive network management expertise. With vast experience in data encryption and cybersecurity, our Apriorit team can help you develop a solution using blockchain technology.
Reproduced with permission from Apriorit. Read the blog post in full on the Apriorit website.