Blockchain technology has been the foundation for most digital cryptocurrencies because it is designed to secure monetary transactions from destruction or duplication. Blockchains themselves are secured using a range of mechanisms such as advanced cryptographic methods and mathematical models. Use of blockchains is therefore being considered for other areas where security and data immutability are critical. Such areas include medical databases, recording or tracking charity donations, supply chain management etc.
The two most significant factors in blockchain security are consensus and immutability. The nodes have the power to agree on the true network state and validate transactions, and this is called consensus. Immutability refers to the blockchain’s ability to stop any alteration in transactions once these have been confirmed. Both these factors combine to provide a framework for security of data in a blockchain network. The emergence of blockchain technology and smart contracts have revolutionized the way in which the world conducts businesses, and perhaps its greatest achievement has been Bitcoin creation.
It was hoped that the Bitcoin will introduce a far more efficient and viable currency that could in future replace the old fiat currencies. Because of the blockchain sending or receiving money in the Bitcoin network is simple and people can engage in cross-border transactions at much lower costs and with no middlemen involved. The users simply have to deploy effective security measures to ensure that transactions stay secure and safe. The invention of automated bitcoin trading bots like bitcoin lifestyle has also increased the bitcoin trade far and wide which is a part of blockchain technology.
The blockchain ensures that transactions can be carried out through simple electronic devices and even across smartphones, because it does not need much hardware to run. Moreover, the blockchain ensures that users can conduct transactions anonymously, keeping their private financial data completely hidden from prying eyes.
Using blockchain for transferring and storing confidential data is now being appreciated by many industries like finance, healthcare, IT, education etc. This has been possible because the blockchain allows for a fast and easy but secure means of sharing data in a network. Security has always been the prime concern where cryptocurrencies like Bitcoin are concerned. Usually, hackers cannot manipulate any data on a blockchain network as it involves extremely advanced and complicated mathematical calculations that hackers cannot perform. No matter how skilled hackers are they find it hard to penetrate the blockchain and steal valuable data.
The blockchain is made tamperproof due to consensus and cryptographic fingerprints. The former suggests that nodes agree on shared data while the latter indicates a unique pattern which is given for each block that cannot be changed. Bitcoin operates using a proof of work protocol where a network of computers or nodes is needed for storing data in multiple locations. These nodes verify that a transaction is valid whereupon it is added to the ledger. The owners of such nodes are miners who are given rewards as Bitcoins when they add new blocks of data to the blockchain.
The hackers will need to have far more powerful computers than nodes to change the blocks. Else, they cannot penetrate the network. This is why many industries are now turning to blockchain solutions as these are tamperproof.