Blockchain technology is often heralded by those promoting it as one of the most secure methods of handling transactions. Blockchain’s security is built upon sets of digital blocks that carry a record of the transactions in question. Each block is securely connected to all of the blocks that came before and those that will come after. It is this connection that makes it much more difficult for hackers targeting a block chain to tamper with the record of an individual transaction. In order to do so, they would have to change not just the one block with the transaction recorded in it, but every other block linked to it.
Additional blockchain technology security
Despite the inherent security offered by the basic structure of blockchains, there are other features that help to ensure the integrity of the data they contain. These include the following:
The data stored on blockchains is secured through cryptography. In simple terms, this means that every user within a network has their own private key that takes the role of a personal digital signature. Any tampering with the blockchain will result in that signature becoming invalid and the peer network immediately realising that something has gone wrong.
The decentralised nature of blockchain technology means the data is distributed across peer-to-peer networks that are always in sync and constantly updated. Unlike many sensitive sources of data, blockchains aren’t stored within a single location, meaning there isn’t an individual potential point of failure. Hackers targeting a chain will have to do much more than attack a single computer or network. Instead, they would have to be able to access a majority of all of the points contained within a specific blockchain and change them all simultaneously. This means that the larger the blockchain is, the more secure it becomes, with bigger networks being far more resistant to any attempts to tamper with them.
Types of blockchain
Rather than simply relying on the nature of blockchain provision to ensure that the data you store in this way is secure, you can take proactive steps to boost security.
The first aspect of the technology to consider is that there are now two types of blockchain – private and public. Public blockchains work via computers that are connected to the public internet. These computers validate transactions, create the blocks and add to the ledger. Any computer connected to the internet can join a public network – the most famous example of a public blockchain network is probably Bitcoin. Where private blockchains are concerned, only organisations that are known are invited to join, creating a members-only network.
The difference between the two types of network affects where the data in question is stored and who is able to access it. This alone might drive your organisation toward one type of blockchain or another, as might the ways in which the types of blockchain are organised.
Ensuring maximum blockchain security
In simple terms, a public blockchain is based on the concept of all participants remaining fully anonymous, while private blockchains use the identity of the members in order to control access to specific privileges and to maintain control over the people or organisations they are dealing with.
Anyone creating a private blockchain can ensure maximum security in the following ways:
Inspect the IT infrastructure the blockchain will use for existing vulnerabilities
Establish security protocols preventing anyone accessing the most sensitive data
Block any attempts to change applications or data across the network
We Can Help
If you’re interested in finding out more about blockchain security, or any other aspect of your business finances, then get in touch with our financial experts at GoCardless. Find out how GoCardless can help you with ad hoc payments or recurring payments.