The Advantages of a More Secure and Safer Blockchain

Blockchain technology has many uses and advantages over other types of ledger-based technology. One aspect of blockchain technology that is especially valuable today is the ability to securely and safely transmit data to and from two or more parties. This is particularly important when the information being shared is highly confidential or valuable. Or, it is important when the people transmitting any type of data back and forth do not know one another, and mutual trust and identity verification becomes critical.

The blockchain is secure due to its highly restrictive math and software regulations that prevent it from being easily hacked or tampered with. The basic reason why blockchain is secure can be boiled down into two main points, according to MIT Technology Review:

1. The use of a cryptographic fingerprint

This fingerprint, according to industry experts, takes a lot of time to cultivate, thus ensuring the person (or, in the case of Bitcoin, the miner) actually put in the necessary work to verify the information. Also known as a hash, the fingerprint effectively closes the block. To change it, another cryptographic fingerprint would need to be generated. This step is not just necessary for one block; it must also be completed for each block following it.

See: How Blockchain Can Revolutionize Personal Data Storage?

Overall, this means that the chain is secure only due to the computing power, time, and energy necessary to change the blockchain. One important note is that this change of the hash must also be completed more quickly than others can create additional blocks to the chain. When seen from this angle, it is very difficult to change any information once it is sealed within the block.

2. Network agreement dependent upon a consensus protocol

This is a verification process that ensures the hash correctly matches the block it is attached to. Once this is achieved, the blockchain is updated to contain the new block and hash.

Blockchain’s Security Challenges

Like any technology, there will always be people trying to maliciously alter the blockchain for a variety of potentially nefarious purposes. The security tools outlined above sound great in theory, but there are issues if the security strategy is not followed precisely. Here a few potential pitfalls:

1. Human error

Not surprisingly, humans make mistakes. Even if one block is put together improperly, it can then weaken the entire chain.

2. Miners who cheat

 One way to cheat the system is when a less powerful miner tricks others into continuing to attempt to problem solve — when the crypto-puzzle has already been completed. This gives the cheating miner an unfair advantage as they work toward completing more blocks in a way that could make them vulnerable to attack. Another way to attempt to control the system is by controlling communication data to allow a block to take in false data that confuses the entire system and/or wastes the time of miners.

3. Third party connections

Some of the most notable blockchain hacks occurred because of the system connected with a third party, such as a software company. People looking to steal money or gain access to data were able to test and access weak points of the blockchain to determine where to attack.

Blockgeeks highlights the failures that led to some of the most infamous and costly blockchain hacks, including the Mt.Gox hack, the DAO hack, the Bitfinex hack, and the NiceHash hack. In 2018, there have been several high profile reports of cryptocurrency fraud and token theft, Coinrail, BitGrail, Coincheck to name just a few.

Blockchain’s Security Solutions

The critical choice between public and private blockchains will have significant security implications for an enterprise. Bitcoin, for example, is a public blockchain, which has as its advantage a system a consensus mechanism whereby anyone can write blocks of transactions to the ledger without needing the permission of a higher authority. With a public blockchain, anyone can have read and write access. In a private or permissioned blockchain, access is limited.

For improved security and privacy (essential for health records, financial data, etc.), a blockchain can be programmed to be unavailable and inaccessible to unknown or untrusted entities. This is a “permissioned blockchain” allowing trusted entities privileges to update the chain with greater accountability than that which is possible within a public blockchain.

“Private blockchain scalability is orders of magnitude higher, as they have fewer users, and a trusted environment without the burdensome computing power required to establish consensus before committing transactions,” noted a 2018 research paper entitled Blockchain and Suitability for Government Applications.

However, private blockchains are not immune to security risk. Trail of Bits, Chain Security, Sigma Prime, and other firms specializing in blockchain security and cybersecurity are being asked to audit code, identify vulnerabilities and resolve issues that can be exploited by criminals and wrongdoers for private and public blockchain ventures.

“The risk and consequences of failure when using this technology is high,” explained Trail of Bits CEO Dan Guido in a recent interview, “Blockchain technology is very unforgiving. Transactions are irreversible, and participants are pseudo-anonymous, which makes it easy for hackers to steal cryptocurrency with impunity.”

Hong Kong-based MATRIX AI Network is using AI to improve the safety and security of blockchain transactions. According to Chief AI Scientist Steve Deng, “to enhance transactional security, MATRIX’s Secure Virtual Machine is able to detect attacks on transactions by providing AI-backed vulnerability detection with fault-tolerant protocols. In other words, the MATRIX team has introduced formal verification technology during transactions to detect security vulnerabilities.”

MATRIX AI Network’s security engine can identify bugs and vulnerabilities in smart contracts, leveraging the power of AI to maintain the safety of digital assets under malicious attacks. Because it is adaptable, the AI can self-optimize over time and improve at finding additional defects that could put transactions and funds at risk. MATRIX AI Network’s security framework consisting of four major components:

(1) a rule-based semantic and syntactic analysis engine for smart contracts; (2) a formal verification toolkit to prove the security properties of smart contracts; (3) an AI-based detection engine for transaction model identification and security checking; and (4) a deep learning-based platform for dynamic security verification and enhancement.

A safe and secure blockchain is critical to build trust and confidence and expand adoption of the nascent technology. A strategic and tactical plan must be adopted by any company seeking to employ distributed ledger technology to avoid or reduce the risk of potential future security issues, which is why cybersecurity consulting companies and artificial intelligence-based solutions are gaining traction. For any business considering blockchain technology, enhancing safety and security will require time, energy, and resources.

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