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How Secure Is Blockchain Technology? Posted on : Oct 12 - 2018

Blockchain is often touted as a secure way of storing information, but just how secure is it?

While nothing is 100% secure, blockchain is designed to be immutable, tamper-proof and democratic. It achieves this, more or less, through three defining characteristics:

1. Decentralization

2. Cryptography

3. Consensus

The complex interplay of these characteristics are what secure blockchain transactions and discourage foul play. For the purposes of this article, we’ll look at the first and most well-known blockchain of them all: Bitcoin.

Decentralization: Creating A Single Version Of The Truth

Traditionally, anyone wanting to store, share or process information has to own it. This involves creating, borrowing or buying that information, obtaining permission to use it (if necessary) and then ensuring everyone is aware of any changes. Sound confusing? It is. Handling information this way can easily become a complex game of telephone with hundreds of weak points and a high margin for error.

Blockchain, on the other hand, distributes the same information to every user (or node) on the blockchain network. When you make a change, the network validates it and then miners (nodes rewarded for updating the blockchain) add that transaction into a new block, which is then added to the blockchain.

This is decentralization -- a single version of the truth but no single point of failure. Change one block, and you’d need to change every subsequent block before any new blocks could be mined. Otherwise, nodes would spot your fraudulent behavior and discard your changes. Given there are thousands of nodes confirming new blocks, it’s unlikely anyone could beat their combined computing power to add a bad one.

Cryptography: The Perfect Disguise

If decentralization is the bones of the blockchain, cryptography is the muscle -- the sinewy, complex mathematical algorithms that deflect attacks.

All data on the blockchain is cryptographically hashed; in other words, it's processed to hide its true identity. Hashing takes any input value and applies a mathematical algorithm (SHA-256 in the case of Bitcoin) to produce a new value of a fixed length. View More