Blockchain seems to be the trend now in the financial and transaction-based industries.
The recent wave of bitcoin has affected the way investments are made. Even the methods of payment have proven to be more effective with it.
The fact that cyrptocurrency set-up allows the movement of Bitcoins with just a button-click has made things easier.
This technology is by no doubt a major disruptor in the financial sector. But it does not stop there as the advantages of blockchain technology have proved to be an advantage for various industries now.
The security involving blockchain technology, how to secure your blockchain wallet, trust in the security mechanisms have always been a debate.
If you want to know more about it, or if you are planning to adapt it to your business then you should know about these facts on this blog.
- Encryption and Validation
In order to increase the security involving the financial transactions, the blockchain technology is made encrypted so that the data revolving around it is not altered.
Since it has a distributed nature, the file signatures in the ledgers present across all nodes can be verified in the network.
One can check if the signatures have been tampered or not. In case anyone tries to change the signature in the record, then the respective signature will be termed invalid.
This procedure will allow the user to make sure that their blockchain ledger has not been tampered and is verified with the data which is backed up and stored in the cloud with the other vendors.
It can be present in the cloud for months and even years, but the data cannot be altered or tampered with.
In the end, because of this feature, the blockchain proves to be reliable and also provides an independent data verification.
There is also the option to create a private blockchain.
While many are only aware of the public blockchain, not many know about the option of keeping the blockchain anonymous with a private connection.
This will allow the blockchain to be made specifically for selected users and restrict others from using it.
The applications availed by the decentralized peer-to-peer network will still remain the same here.
Any person who will need to access the private blockchain will need to provide proper identity and also authenticate it in order to gain the privileges to it.
- Decentralization and Hacking
In the process of the blockchain, the data are broken down into small pieces unlike the uploading of one single piece of data to the cloud and storing it there.
These small chunks of data will be spread across the network, which can be accessed from any computer.
It can be considered as a digital ledger full of transactions which do not have a single control point as the center.
Every node or computer will have a set of the ledger copy. This makes sure that even if several nodes go down at one point, there will not be any kind of data loss.
In this case, there is no middleman involved. So there is no third-party required in order to make a transaction happen.
This makes sure that there is no risk of placing the trust in a service provider as there is a decentralized ledger present.
One other topic involving security is hacking. There are many cases where hackers broke into the normal networks and acquired the data which is present in a single repository. The data is even corrupted at times.
But in the case of blockchain, this is pretty difficult.
Since the data is decentralized and also encrypted, there is a possible double checking across the full network.
This makes sure that the ledger on record will be impossible to be removed or even altered without anyone noticing it.
The transaction will be confirmed with multiple nodes present in the network.
- Possible Limitations
While the above-mentioned facts are true, one has to be sure that the blockchain should be distributed enough, in order to make sure it is not vulnerable to any attack.
The network bandwidth demands have to be considered along with the size of the network communication overhead.
Since it is a new technology, all the possibilities might not have been explored.
Still, it is considered the best option in terms of security now.