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Blockchain security and privacy protection in blockchain systems require compliance with several security requirements based on selected features. The blockchain system is a new and advanced technology that is introduced as the safest method of financial transactions. This issue is due to the decentralization, transparency and cryptography of the blockchain platform. Blockchain security is one of the important topics for those interested in this field, who are always asked questions such as how does blockchain guarantee information security? they are facing.
Due to the feature of anonymity of information, the blockchain platform has helped to protect the privacy of users. In such a way that many financial systems are trying and doing intensive work to transfer their architecture to the blockchain platform. On the other hand, the characteristic of transparency in this network, due to the availability of user information for all members of the blockchain, can be a conflict for the privacy of this network.
Meanwhile, due to the feature of anonymity, you can transfer millions of dollars in this ecosystem completely anonymously. The blockchain network has two unique features, the contrast of transparency and anonymity of information, and these features are considered a positive point for this technology from a fundamental point of view.
Now, in response to those people who ask, how does blockchain ensure information security? It can be said that methods such as Mixing method, anonymous signatures, homogeneous encryption, smart contracts and proof of non-interactive zero knowledge, etc., have been considered in order to ensure blockchain security and privacy in the blockchain platform, which we will discuss further.
What is meant by privacy in the blockchain platform?
Maintaining and increasing the privacy and security of the blockchain is very important for users of the digital currency market. Blockchain is a type of decentralized technology that no government institution or organization can control, monitor and manage. All activities and transactions carried out on the blockchain platform are controlled and checked by smart contracts. In addition, all transaction history is recorded and stored in the blockchain and you will be able to view it. On the other hand, the members of this network reach a collective decision by consensus about the changes made in the networks.
Therefore, due to the specific transparency of the blockchain, any activity that takes place in the blockchain network can be tracked and observed by all network members.
In other words, by making any transaction on your part, all users of that network around the world will see this transaction. This issue has increased the importance of blockchain privacy and security. Users are always trying to increase their privacy in this network.
The issue of transparency conflicts with the privacy of blockchain members. Because no company, financial institution or person wants to have the information of their transactions and assets available to everyone.
The apparent conflict between privacy and transparency in blockchains
It is better to answer the question of whether blockchain and privacy are in conflict with each other. The answer is important. Actually, the answer to this question is both yes and no. By stating the first condition of blockchain transparency, the answer to this question can be considered positive. Because any activity in the blockchain network is available to all blockchain members as a group of information. For example, someone who has your Bitcoin wallet can easily access all your transactions. In fact, one of the strengths of blockchain security is the transparency of information.
If you want to use the blockchain to maintain medical information (this is currently the best technology to access medical information), you will face the problem that your medical information is available to all members of the blockchain. In fact, this poses a serious violation of privacy. Because no financial company or person wants the information of their transactions and assets to be available to everyone.
Blockchain security and privacy with information anonymity feature
In response to the aforementioned question of whether blockchain and privacy are in conflict? We can state the second condition that characterizes the anonymity of information. Therefore, it can be said that blockchain and privacy are not in conflict. This feature explains why hackers use Bitcoin for ransom. In fact, blockchain, while being transparent, has the property of information anonymity.
You can transfer millions of dollars anonymously on the blockchain. Criminals and hackers can remain anonymous in the blockchain system and no one can track them. In fact, blockchain has two characteristics and a unique contrast: transparency and anonymity.
In fact, due to public keys and pseudonyms and anonymous names, people can perform their operations in the blockchain system without revealing their identity. Therefore, it can be said that the anonymity of your information in this network preserves privacy and does not conflict with blockchain security. The two properties of transparency and anonymity are fundamentally positive points for this technology.
Important features of blockchain
Blockchain is a relatively dynamic technology in the modern world. Unlike the usual centralized systems, the blockchain platform is decentralized and distributed. This means that instead of having an administrator, all users can play a role in it. The features of the blockchain simultaneously make the security of the blockchain possible by creating its structure. Below are some of the features of blockchain:
being digital
All information on the blockchain network is digital, and therefore paper and manual documents are no longer needed.
being a dynasty
Each block in this network stores information related to its previous block. Blocks connected to each other create a chain consisting of transactions performed on the network.
Digital signature
Blockchain can only verify the value of a transaction by digital signatures that are linked to the public key (a cryptographic code known to everyone on the network). Private keys have the same function as passwords and are defined only for owners. This is one of the important solutions to prevent theft and fraud in the network.
being anonymous
Each of the users in the blockchain network is able to transact with unknown addresses similar to aliases. In this network, there is no need for a person’s real identity in the real world to exchange information and make a transaction. It is possible to share information only with the agreement of the transaction parties.
Distributed
The blockchain network is distributed as a public ledger among all network members, and these members are responsible for controlling and confirming transactions. The participants of this network confirm their received information without needing access to a centralized authority. The operation of this system has prevented any errors. If a node (participant in the network or node) fails to do its work properly, there will be no disruption to other nodes and system performance, and each one will do its job properly.
Immutability
All transactions based on the blockchain network are immutable. for each of them; The date, time, participants and hash of the previous block are correctly encrypted. Also, reversing and deleting a transaction in the blockchain network is almost impossible. Each of these information is encrypted in the network. The blocks created during a transaction on the blockchain are not deleted, duplicated or changed in any way. This has increased the security of the blockchain.
Consensus property
A transaction is created on the blockchain only if at least 51% of participants approve it. Based on consensus algorithms, in order to maintain the security of the blockchain, no invalid transaction is created or maintained in the blockchain. The only way to create a transaction is to gain the trust and approval of the majority of participants in the network. Various consensus algorithms are used in blockchain, but Proof of Stake (PoS) and Proof of Work (Pow) algorithms are currently the most popular.
sustainability
Blockchain information is complete, correct, stable and largely accessible. It is not possible to delete any old data in this network. For example, if you want to delete or change block number 560 in a chain of 1000 blocks, you must also change all blocks from 561 to 1000 and get the consensus of the majority of network users. Although this is theoretically possible, it is very expensive. In this matter, you have to take over 51% of the network share, which is very difficult in large and wide blockchains. Therefore, the information in the network is permanent and stable.
Which features provide blockchain security?
Although nothing is absolutely 100% secure, some features of blockchain such as its immutability, anti-forgery, and public nature can make users feel at ease. Blockchain helps to record any assets that are transferred between two parties of the transaction. Many aspects of blockchain security play an important role in ensuring transparency, confidentiality, and guarding against fraud and theft. Below are some of the most important features of blockchain security:
Privacy with transparency
In blockchain security, one of the important things is that the users of a ledger are only able to view confirmed transactions. In fact, this feature is one of the most important indicators of blockchain security. This means that a user cannot identify the identity of other users by checking the ledger and can only observe the process of transfers and exchanges. Therefore, at the same time that all users have access to the ledger, users’ privacy is maintained to a large extent.
Transparency and privacy can be contradictory from some points of view. Because any activity you do in this network is available to all members of the blockchain as a group of data, and as a rule, no company or financial or personal institution wants its assets and transactions to be available to everyone. But due to the anonymity of this information, the conflict between blockchain and privacy can be denied.
Ledger or ledger
A ledger can record all transactions of a blockchain. The ledger is a chain of blocks in which the information stored cannot be changed. After the transactions are recorded, its information is also recorded in all other nodes around the world.
A chain of blocks
Blockchain is a chain of many blocks, each of which has the hash value of its previous block. Therefore, they form a chain. This feature of blockchain is one of the important things in helping to protect data. Considering the explanations we said in the blockchain stability section, it is not possible to change and delete past data recorded in the blockchain network.
encryption
In the discussion of blockchain security, information is encrypted by different algorithms. Therefore, no one can manipulate and change the information until they have your password key. These algorithms are different for each cryptocurrency. Cryptographic algorithms are programmed in such a way that by receiving any input of any size, it provides an output of a certain size. This model of converting input information into output is called hashing. The obtained output, which consists of letters and numbers, is also called a hash.
Smart contracts
These contracts have the same function as paper contracts and are written as computer codes. Each of the smart contracts in blockchains has rules that the groups that use them must agree on. When the agreement related to smart contracts is defined and coded, after the implementation, there is no need for an intermediary and all work is performed automatically and without people, according to the contract. It should be noted that in this part too, no smart contract will take place without the consensus of the network.
Is it possible to hack blockchain?
Although the security of the blockchain is very high, according to the mentioned features, it can be said that it is possible to hack the blockchain. But this is very difficult and expensive. Usually, the consensus algorithm and mechanism of the blockchain network invite users to honest activities and make the profit of all users dependent on it. But you should know that the more widespread the blockchain of a cryptocurrency is and the more users it has, the more expensive and difficult it will be to hack.
In fact, nothing in the world is 100% safe, but blockchain technology is one of the safest technologies in the world. Regarding financial issues, very intensive things are being done to bring the architecture of all financial systems to the blockchain. The security of blockchain is strongly guaranteed due to the property of consensus, decentralization, encryption, etc. By combining these three features in the emerging blockchain technology, the work of fraudsters and hackers becomes more and more difficult.
How does blockchain ensure information security?
As mentioned above, blockchain technology is designed in a way to create blockchain security. which requires the validation of different network nodes for each transaction with information storage. This concept is called consensus algorithm and it was considered as one of the important features to secure the blockchain. In this way, a malicious agent cannot disrupt or change the registered information by accessing the company’s centralized database. Therefore, the information stored in the blockchain network is considered immutable due to the signature of the nodes for change.
In addition to the concept of consensus, the foundation of this network is based on encryption and data security, and hashing is used to confirm transactions and transfer information.
According to the concept of hashing, it is never possible to create two identical hashes for different information. The hash of the previous block is also used to create each block in the blockchain network.
If someone (hacker or malicious agent) wants to change the previously stored data, he has to rebuild all the blocks after that and hash them. Due to this feature of blockchain technology, this person’s vandalism will be revealed quickly and all the multi-billion users of this sector will be informed.
A solution to increase blockchain security
The most important method to increase the security of blockchain and decentralized networks based on it is to expand them. so that the number of parallel nodes increases with the hash rate. The more nodes there are and the higher the hash rate, the more difficult an entity will be to gain more than 50% of the network’s power and execute a majority attack.
In centralized and even decentralized blockchain-based networks, the need to obtain permission to access the blockchain is a good way to increase blockchain security. Of course, this issue is contrary to the actual application of blockchain, which was created as a structure to create public networks (accessible to all) distributed and decentralized.
What are the types of security attacks on blockchain?
Most blockchain networks are a platform for digital currencies, and these currencies actually play the role of money, and any place where a lot of money is stored is undoubtedly the focus of fraudsters and hackers. But what is noteworthy is the complexity and technicality of hacking a software financial system of a decentralized type.
But the security of any technology or system cannot be considered absolute. Blockchain networks are generally distributed and their use in centralized systems is not common. Here are some of the methods that fraudsters and hackers use to attack blockchain technology:
51% attack (majority attack)
The main and most common method of gaining control of a decentralized distributed network based on blockchain technology is the 51% attack or majority attack. In this attack on blockchain security, a certain entity will manage to take control of more than 51% of the network’s hash rate.
This entity, at least theoretically, will be able to change or rewrite the history of network transactions such as Bitcoin and especially Double Spend.
Phishing attack
Phishing attack is a method in which a hacker, through a communication method such as email, establishes a connection with the owners of the private keys of the blockchain address, such as digital currency wallets or exchanges, and encourages these people to use links that lead to a site very similar to The main site will end.
If users do not pay attention to the URL address, they will enter their account information in the fake site and fall into the trap of phishing attack. By entering the user account of these people, the hacker transfers all their balance to another wallet.
Sybil attack
The name of this attack is taken from a multi-identity character in a book called Book Sybil. In this book, a person named Shirley Mason has a personality disorder. In the Siebel attack, hackers sent a large volume of requests to the network by creating many fake identities, thereby disrupting the security of the blockchain.
Routing attack
Routing attack is related to the data transfer path in the Internet platform. Blockchains transfer a large amount of information at the moment and it is interesting that users do not notice anything in a routing attack and everything seems completely normal.
But behind the scenes, hackers have extracted the information they want by manipulating the transmission path, and thus endanger the security of the blockchain.
The Bitcoin blockchain enlists the help of volunteers to sign the hashes of its network transactions. This system makes the transactions irreversible and increases the security of Bitcoin data.
Bitcoin is one of the safest digital currencies. The proof-of-work system used in the Bitcoin blockchain network provides the security of the blockchain and the transactions of this network.
Features such as hash signatures, smart contracts, cryptography, ledger or ledger, stability, consensus feature, etc. provide blockchain security.
Using proof of zero knowledge, ring signature, coin mixing and changing addresses, smart contracts, secure multi-sector calculations, homogeneous encryption, etc. There are some ways to increase the security of the blockchain.
