{"id":1092,"date":"2018-05-23T20:30:00","date_gmt":"2018-05-23T20:30:00","guid":{"rendered":"https:\/\/www.darkreading.com\/endpoint\/the-good-and-bad-news-about-blockchain-security\/a\/d-id\/1331872"},"modified":"2018-05-23T20:30:00","modified_gmt":"2018-05-23T20:30:00","slug":"the-good-bad-news-about-blockchain-security","status":"publish","type":"post","link":"https:\/\/www.threatshub.org\/blog\/the-good-bad-news-about-blockchain-security\/","title":{"rendered":"The Good & Bad News about Blockchain Security"},"content":{"rendered":"
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Blockchain technology promises many things. But to succeed, it must offer users a better plan against hackers.<\/span> <\/p>\n

In a year of whiplash news cycles, bombshell stories, and incredible front-page scoops, one story \u2014 the blockchain and its potential world-shattering influence \u2014 has continuously dominated the news.<\/p>\n

But blockchain technology \u2014 the endless link of cryptography-secured records that gave us Bitcoin but whose potential for other uses is limitless \u2014 is as controversial as it is conspicuous. Those who believe in the power of blockchain will take their worship to a near-religious level, while those who remain skeptical (or simply confused) by the complicated technology will tell you that it’s all hype. It’s a house of cards destined to fall, they’ll say, or they’ll tell you hackers will soon seize control of the entire system and leave us all penniless and destitute.<\/p>\n

But here’s the thing: both sides are right, and also wrong. That’s because blockchain, in its current use, is incredibly restrictive. But if<\/em> it can adapt and evolve as demand and interest grows, it could truly change the world.<\/p>\n

What Is Blockchain?<\/strong>
First, a primer. Blockchain is, at its core, a method for humans to conduct secure, verified, and recorded transactions online without the use of a middle party. Bitcoin, in which money can be passed between online users without the presence of a bank or holdings company to verify and handle the transfer, is the most well-known type of blockchain.<\/p>\n

It’s always been believed that when it comes to important transactions, such as casting a vote in an election or paying for the cost of goods, we need a dominant central authority to manage the transaction in order to verify that it was indeed carried out, and also that the process is secure and protected. The bank confirms that the money is, indeed, in the account. The elections commissions confirm that the votes are, indeed, accurately cast and counted.<\/p>\n

But using a form of math called cryptography, blockchain has created a workaround. Cryptography ensures that records can’t be counterfeited or changed, and when you use blockchain to send money, or track digital assets, or even share intellectual property, the entire community of blockchain uses helps verify and secure the transaction, making it difficult for an outside party like a hacker to corrupt the system.<\/p>\n

What Needs to Change?<\/strong>
In its current form, blockchain is very restrictive. Its proponents say that in 10 years we might use blockchain to pay our taxes. They declare that it will free up citizens to send money and aid to friends and family around the world, to build online businesses from the comfort of their home computers, and to free citizens from the financial grip of big banks and corporations who eat up their profits and don’t share the wealth down the food chain.<\/p>\n

That may all be true, but not in its current form. Right now, blockchain touts itself as being fully anonymous \u2014 no one online knows who you are or where you’re located when you jump into the chain. It’s democracy in its purest, most unadulterated form.<\/p>\n

But anonymity, even in the darkest corners of the Web, is never 100% guaranteed. If you make transactions online, those transactions can be traced and followed, and eventually they will lead, just like a trail of crumbs, to your true and honest identity. It may take some digging, but one should understand that, when joining blockchain, our identity might not be fully obscured.<\/p>\n

So, first and foremost, for blockchain to survive and thrive in the future, its users need to accept this reality.<\/p>\n

No Silver Bullet<\/strong>
Much of blockchain’s popularity comes from its reputation as an infallible currency. But there’s an old adage that applies here: if it seems too good to be true, it probably is. Blockchain uses public key encryption schemas, which means they are quite hard to crack.<\/p>\n

But just because the front door of blockchain is protected doesn’t mean the back doors and garage are secure. Endpoint vulnerabilities \u2014 insecure key storage, or an insecure platform \u2014 could easily lead to exposure. A more distant potential threat is quantum computing. Theoretically, popular public-key algorithms can be efficiently broken down by quantum computers (see Shor’s algorithm<\/a>). If and when this becomes a reality, the underlying technology needs to change. There is also the looming possibility of “consensus” failure, when a significant number of participants team up against other members, especially considering the hostile geopolitical climate and locations of many mining farms. And let’s not forget that blockchain technology is tangled and complex, meaning hidden vulnerabilities in code can lead to catastrophe.<\/p>\n

Who Is the Watchdog?<\/strong>
Blockchain, meet stumbling block: in a perfect, utopian world, watchdogs who provide central authority and regulation wouldn’t be necessary. And the liberation from the need for the middleman, and his controlling, profit-cutting, and potential corruption, is of course what makes blockchain appealing.<\/p>\n

But all systems have a weakness, and all weaknesses are eventually exposed. Cryptocurrency funding is the Wild West \u2014 ICOs, or the initial coin offerings that bring funds to each new cryptocurrency venture \u2014 are totally unregulated. So, when the day comes that hackers take advantage of blockchain, the vacuum created by lack of a central authority will be deafening. In the case of loss or theft, central authorities are a lifeline. Who here hasn’t had a fraudulent transaction on their credit card fixed by a simple phone call to the bank? If you have a credit card, you don’t need to worry about theft. Should the worst happen, your money will be safely returned.<\/p>\n

With blockchain, there is no such safety net. Blockchain, in order to survive, must find a way to remain democratic and open while still providing its users with some sort of security plan in place for the day that hackers take advantage of the system.<\/p>\n

Blockchain offers great potential. To make it real, the next great innovation should pass three key hurdles: regulation, usability for the masses and unique use cases that can be fulfilled only through this technology. The world is waiting.<\/p>\n

Related Content:<\/strong><\/p>\n

Michael is CTO of CyberGuild Ventures, a VC and venture builder dedicated to developing standout Israeli cybersecurity startups. Michael has 30 years of industry experience transforming vision into marketable technology products for global enterprises and startups. During … View Full Bio<\/a><\/span> <\/p>\n

More Insights<\/span><\/p>\n

Read More HERE<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Blockchain technology promises many things. But to succeed, it must offer users a better plan against hackers. 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