Concerns about security and privacy of sensitive information always remain a hot topic concerning the web. Today private data is stored in centralized databases. This approach creates a single point of entry that hackers can exploit and gain access to sensitive data such as identity information or even secret government files. However, Blockchain can change the situation dramatically.
With the use of decentralization, in a Blockchain data is stored on all participating computers that are connected in a peer-to-peer network, allowing to eliminate the main weakness of a centralized database – a single entry point.
An intruder must launch an attack of unprecedented scale targeted at all nodes of the network, effectively hitting thousands if not millions of computers in a simultaneous strike to retrieve cryptographically encrypted data and subsequently attempt to put the pieces of the puzzle together. With today’s world technology such an attack is possible only in theory.
In a cryptocurrency such as Bitcoin, funds are stored in Bitcoin wallets that are protected by cryptographically encrypted key pairs. Each wallet is associated with cryptographical keys rather than with someone’s identity directly. Therefore, even if a key pair is compromised, owner’s identity remains unknown.
Blockchain Safety and Privacy concerns
Even though Blockchain is undoubtedly a generational leap forward in regard to the level of security, there are still aspects of it that can be exploited.
Vulnerable endpoints in Blockchain
Simply put, an endpoint is a computer that is used to access the blockchain. In any case, users have to use a device to communicate with the Blockchain, and it is here where Blockchain becomes most vulnerable. For example, when using an online wallet, users need to input a private key. During this process, the key shortly becomes exposed as the wallet provider is processing the information.
Centralised aspects of Blockchain
Even though Blockchain itself is decentralized, there are still aspects of it that use the old fashion centralized approach. For example, online cryptocurrency exchange platforms often become targets of hackers because they introduce a single point of failure, where sensitive information is stored and can be stolen.
Privacy concerns in Blockchain
Transactions in Blockchain itself may remain entirely private, but sensitive information is still required to access some points of the blockchain ecosystem. For example, following government regulations, several exchanges require users to provide identity information. The result is private keys and identity data being held in a single centralized database of the exchange itself, where they are most vulnerable.
Other Blockchain vulnerabilities
- We don’t know how Blockchain will work at full scale
- Blockchain vendors can introduce flawed code
- Blockchain is a new technology and lacks standard regulations
- Blockchain is still in an experimental stage and we can’t foresee how certain aspects of the code will behave
- Blockchain is prone to majority attacks. Theoretically, most users can create a conspiracy against the minority.