Blockchain has remained to be one of the emerging technologies that have the potential to change the way everything functions. In fact, it has been forecasted that blockchain technology revenues will grow massively in the near future. By the year 2025, the revenues will touch a staggering $39 billion. Also, the financial sector will be the first to go full throttle on blockchain and more than 60 percent of the value of the technology’s market will be confined to this field.
Owing to its unique features of functioning as a tamper-evident distributed ledger, blockchain has great potential to transform businesses spanning across various industries. One of the most popular use cases of blockchain has been the logistics and supply chain management.
Whether it is the number of transactions being carried out by the parties or the ease of traceability of products bought by customers, the supply chain sector will benefit immensely from the new tech. This is because blockchain is synonymous with transparency and security. But, what makes the data on the blockchain so secure? Let’s explore in detail.
What does blockchain consist of?
In simple words, blockchain refers to a continuous chain of blocks. Here, a “block” means a digital piece of information stored in a public database called the “chain”. These blocks store information such as the time and date of the transaction and the parties involved in the transaction.
Depending on the size of the transactions, a single block in a blockchain can store more than one thousand transactions together. What’s very interesting is that each block in the blockchain stores a “hash”, a special encrypted code that distinguishes one block from the other. These “hashes” are nothing but cryptographic codes generated by unique algorithms.
How does blockchain work?
Since blockchain consists of blocks of encrypted data, whenever a block stores new data, it is added to the chain. However before a block is added, there is a series of certain processes that must happen. Firstly, a transaction must happen and it must be verified. In a blockchain, a network of computers decides the verification of transactions irrespective of the sources of the transaction such as the Securities Exchange Commission, Amazon, or your local grocery shop.
When a transaction is confirmed, the details including the time of the transaction, money spent, and name of participants are stored in a block. As soon as this is done, a unique identifying code called “hash” is assigned to the block. After getting hashed, the new block is finally added to the public blockchain, where anyone can view the transaction, including the person who performed it.
How secure is blockchain?
Before getting into this topic, it must be noted that blockchain ensures trust and security at various levels. Since the arrangement of the blocks happens in a linear and chronological fashion and there is hashing of each block, it’s almost impossible to modify or delete a block once it is added to a blockchain.
As soon as a block is added to the blockchain’s end, it is really difficult to undo or delete it from the chain. This is primarily due to the hash associated with each block. Every block has a unique hash and also the hash of the previous block in the chain. These hash codes are generated with the help of complex math functions and algorithms, which thereby convert the digital information into a string of numbers and letters.
If anyone tries to tamper with the data in any block, the hash codes associated with all connected blocks will change. That is why hash codes form an integral feature for securing the information on the blockchain.
Is the blockchain easy to hack?
Let’s consider an example. For instance, you purchased something from Amazon and the successful transaction gets stored in a public blockchain. However, a hacker wants to know your card details and other related sensitive information and tries to access the transaction. When the hacker tries to modify or access any details, it will change the hash code of the particular block.
Also, the successive blocks that contain the old hash will get changed and if the hacker wants to go unnoticed, he must ensure that each block’s hash code is changed accordingly. Performing such a tedious task will definitely consume a lot of computing power and the number of hashes to be modified will be enormous.
Besides, there is another aspect of security when it comes to blockchain. There are certain “implemented tests” for computers who wish to join a blockchain. These tests are known as “consensus models” that have to provide some “Proof of Work”. This feature addresses the issue of trust in a blockchain as the computers have to “prove” the fact that they have solved a computational math problem to become eligible for joining or adding blocks to a chain. Such “Proof of Works” and the immutability of the blocks keep hackers and 51% attacks at bay.
Will blockchain be the new wave?
Owing to the different types of benefits that blockchain technology offers, every industry will try to adopt it in the near future. Right from the supply chain industry to financial institutions and medical database management systems, blockchain will be the new norm amongst other technologies.
Today, security is a crucial aspect of any application and blockchain technology reinforces that fact very well through cryptographic hash codes and consensus algorithms. So, how prepared are you for this new wave? Don’t you want to leverage the advantages of blockchain for your business and build an application to secure and streamline everything? Get in touch with our experts if you have any such idea in mind.