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Blockchain Cybersecurity

A blockchain is a database that stores data in the form of chained blocks. A blockchain can be used in a centralized or decentralized manner. Decentralized blockchains are not owned by a single entity – rather, all users have collective control. Let’s take Bitcoin, for example. Bitcoin’s network consists of thousands of computers, called nodes, which are operated by individuals or groups of people in different geographic locations. Decentralized blockchains are immutable. This essentially means that data transactions are irreversible. Blockchain technology’s decentralized nature makes it ideal for cybersecurity.



Blockchain technology produces a structure of data with inherent security qualities. It's based on principles of cryptography, decentralization, and consensus, which ensure trust in transactions. In most blockchains or distributed ledger technologies (DLT), the data is structured into blocks and each block contains a transaction or bundle of transactions. Each new block connects to all the blocks before it in a cryptographic chain in such a way that it's nearly impossible to tamper with. All transactions within the blocks are validated and agreed upon by a consensus mechanism, ensuring that each transaction is true and correct. Blockchain technology enables decentralization through the participation of members across a distributed network. There is no single point of failure and a single user cannot change the record of transactions. However, blockchain technologies differ in some critical security aspects.


Blockchain cyber security is one of the latest cyber security technologies that’s gaining momentum and recognition. The blockchain technology works on the basis of identification between the two transaction parties. Similarly, blockchain cyber security works on the basis of blockchain technology’s peer-to-peer network fundamentals. Every member in a blockchain is responsible for verifying the authenticity of the data added. Moreover, blockchains create a near-impenetrable network for hackers and are our best bet at present to safeguard data from a compromise. Therefore, the use of blockchain with Artificial Intelligence can establish a robust verification system to keep potential cyber threats at bay.


Cybersecurity spending has increased exponentially in the past decade, with no signs of slowing. Worldwide, organizations plan to allocate more than $1 trillion between 2017 and 2021 to protect themselves from online threats, according to one industry report. The high level of dependency on technology and the internet today has resulted in new business models and revenue streams for organizations but with this comes new gaps and opportunities for cyber attackers to exploit. Cyber-attacks have become increasingly targeted and complex due to more sophisticated pieces of malware being leveraged and the increasing threat of professional cyber organizations. These cyber criminals are attempting to steal valuable data, such as intellectual property (IP), personal identifiable information (PII), health records, financial data, and are resorting to highly profitable strategies such as monetizing data access through the use of advanced ransomware techniques or by disrupting overall business operations through Distributed Denial of Service (DDoS) attacks7 . In October 2016, one of the biggest domain name service (DNS) providers Dyn experienced a major distributed denial of service (DDoS) attack that disrupted the service of several high traffic websites such as Twitter, Netflix, and Spotify. Blockchains could potentially help improve cyber defense as the platform can secure, prevent fraudulent activities through consensus mechanisms, and detect data tampering based on its underlying characteristics of immutability, transparency, auditability, data encryption & operational resilience (including no single point of failure).


With the rolling out of 5G networks, download speeds will increase substantially, in turn creating more opportunities for hackers to expose security inefficiencies. Faster download speeds will encourage larger cyber crimes as well.

The number of globally connected Internet of Things (IoT) devices is projected to amount to 13.8 billion devices in 2021. As there is a huge commercial appetite for IoT, enterprises are coming up with a range of applications, from wearables to smart homes. Patchy security features could be exposed by miscreants. This is where blockchain technology comes into the picture.



Here is how blockchain technology can strengthen cybersecurity:

  • The number of social media platforms that we use is on the rise and most are protected by weak and unreliable passwords. Large quantities of metadata are collected during social media interactions and hackers can create havoc if they gain access to this data.

  • Blockchain technology can be used to develop a standard security protocol, as it is a sounder alternative to end-to-end encryption. It can also be used to secure private messaging by forming a unified API framework to enable cross-messenger communication capabilities.

  • Through edge devices, hackers have been able to gain access to overall systems in the past. With the current craze for home automation systems, hackers can gain access to smart homes through edge devices like smart switches, if these IoT devices have dodgy security features.

  • Blockchain technology can be used to secure such systems or individual devices by decentralizing their administration.

  • By decentralizing Domain Name System (DNS) entries, blockchain technology can help prevent Distributed Denial of Service (DDoS) attacks.

  • With increasingly large quantities of data generated each day, storing data in a centralized manner leaves it potentially exposed, as a single vulnerable point can be exploited by a hacker. By storing data in a decentralized form using blockchain, it will be nearly impossible for miscreants to access data storage systems.

  • Blockchain technology can be used to verify activities like patches, installers, and firmware updates.

  • Blockchain technology can be used to protect data from unauthorized access while it is in transit, by utilizing encryption.

The inherently decentralized nature of blockchain technology has several applications, of which cybersecurity should be explored. Data on blockchains cannot be tampered with, as network nodes automatically cross-reference each other and pinpoint the node with misrepresented information. Blockchain technology provides the highest standards of data transparency and integrity. As blockchain technology automates data storage, it eliminates the leading cause of data breaches – human error. Cybercrime is the greatest threat to enterprises and blockchain technology could go a long way in fighting it. Blockchain offers a different path toward greater security, one that is less traveled and not nearly as hospitable to cybercriminals. This approach reduces vulnerabilities, provides strong encryption, and more effectively verifies data ownership and integrity. It can even eliminate the need for some passwords, which are frequently described as the weakest link in cybersecurity.


The principal advantage of blockchain is its use of a distributed ledger. A dispersed public key infrastructure model reduces many risks associated with centrally stored data by eliminating the most obvious targets. Transactions are recorded across every node in the network, making it difficult for attackers to steal, compromise, or tamper with data unless a vulnerability exists at the platform level. Another traditional weakness is eliminated through blockchain’s collaborative consensus algorithm. It can watch for malicious actions, anomalies, and false positives without the need for a central authority. One pair of eyes can be fooled, but not all of them. That strengthens authentication and secures data communications and record management. Although blockchain contains many nontraditional features, it does take advantage of one of the most important cybersecurity tools: encryption. The distributed ledger can utilize public key infrastructure to secure communication, authenticate devices, validate configuration changes, and discover confidential devices in an internet of things (IoT) ecosystem. Through encryption and digital signatures, a blockchain system can shield connected thermostats, smart doorbells, security cameras, and other vulnerable edge devices. A recent Palo Alto Networks report said that 98% of IoT device traffic was unencrypted and described it as “low-hanging fruit for attackers.” Also, this technology can be a weapon against distributed denial-of-service (DDoS) attacks. A blockchain-based domain name system (DNS) — the protocol for directing internet traffic — can remove the single point that allows these attacks to succeed. In 2016, a large portion of the internet went down because of a DDoS attack on the servers of one DNS host.


Blockchain challenges

Organizations from multinational corporations to governments are clamoring to adopt blockchain-based cybersecurity, viewing it as the next big thing. But it’s not as simple as updating an existing toolkit.

This intertwining of blockchain and cybersecurity is still an evolving approach. Not all research ideas on digital identities, decentralized storage, securing edge devices, and smart contracts align with business needs. Without careful consideration, implementation can become impractical or even impossible. Here are some hurdles that organizations may encounter when considering blockchain as part of their cybersecurity strategy.


Data Privacy

In the public blockchain, anyone can see and retrieve data in transactions. That’s a concern for businesses that want to closely control what information is publicly available.

Permissioned blockchain can help mitigate many of those privacy issues. An enterprise blockchain platform can create a permission network that allows only trusted parties to participate in or view transactions and to vote on decisions.

Scalability

Scalability can become a constraint when implementing blockchain, mostly due to block size and response times. In this technology, every node stores, processes, and maintains transactions in a block to ensure security and privacy. But as the number of transactions increases, small and medium-sized businesses struggle to accommodate a growing number of transactions in a block. Those increases can also slow the validation process. With limited computing and storage resources, scalability is at odds with decentralization.

Regulations

Organizations are still trying to understand how blockchain’s structure and complexity fit within the evolving data privacy, compliance, and regulatory landscape. Europe’s General Data Protection Regulation (GDPR) and similar laws allow individuals to demand that their data be deleted; these laws also create a “right to be forgotten” in certain cases. Since blockchain prevents parties from modifying or deleting data, the technology risks violating government rules.

Interoperability

Some blockchain platforms use a varied ecosystem for their smart contract logic, transaction schemes, and consensus models. Weak interoperability limits scalability. From the developer perspective, roadblocks can also be created from platform misconfiguration, communication mistrust, specification errors in application development, and cross-chain smart contract logic problems.

Thankfully, open protocols, multichain frameworks, and algorithms are taking root in blockchain and mitigating this issue. Business communications organization GS1 has published global standards for blockchain interoperability, and it is working with Microsoft and IBM on incorporating those standards into their enterprise blockchain applications. The Enterprise Ethereum Alliance is also developing business standards.

Technology risks

Blockchain offers several benefits, such as efficiency, optimization, reduced costs, and improved security. However, the technology also introduces new risks into systems when not carefully managed. These risks include:

  • Improper key management and access control. Unlike traditional means, end users are completely responsible for managing their digital assets. Private keys are mapped with user ownership, so unauthorized access or theft of cryptographic keys may lead to a total and irreversible loss.

  • Unintended forks and chain split attacks. During the smart contracts upgrade process, there is a chance that some nodes may not support the changes made during the consensus phase. That can lead to a new chain splitting from the old and introduce blockchain-specific risks, such as replay, double-spend, and 51% attacks. In those cases, unauthorized parties could block, reverse, or repeat transactions.

  • Inadequate encryption scheme selection and insecure operations. Transmitting or storing sensitive data using cryptographic algorithms isn’t enough to protect against man-in-the-middle attacks. A number of factors could make blockchain vulnerable to this type of intrusion, including inadequate encryption, weak or incorrect keys, key management errors, incorrect cryptographic implementation, or improper verification of digital signatures or certificates.

  • Application programming interface (API) integration. Third parties are required for API integration, whether it’s a private or public blockchain. That leads to trust issues and unintentional leakage of sensitive data.



Blockchain benefits

Even with potential barriers, the combination of blockchain and cybersecurity has intrigued executives and technology experts. In a 2019 Infosys research report, one-third of respondents cited blockchain use in developing security solutions as a top cybersecurity trend. It tied for third among all topics and ranked even higher than the increased demand for cybersecurity jobs.

Here are some of the factors that make blockchain promising and ways it should be managed:

  • Data protection and privacy. The technology provides selective access to transactions and information in the distributed ledger with minimal governance. Also, blockchain doesn’t give cyberattackers traditional data protection targets and the ability to undercut privacy challenges. Overall, that makes it harder to access or modify information in blockchain ecosystems.

  • Smart contract security. Blockchain components like smart contracts, applications, APIs, digital assets, and wallets must be tested for access control, authentication, data security, and business logic validation. This provides greater confidence among participants in the permissioned chains.

  • Public key infrastructure management. Asymmetric cryptographic keys and digital signatures are core aspects of blockchain security. In its implementation, the public key defines the digital identity to node participants. However, the private key authorizes the actions, including securely encrypting, signing, and verifying transactions. Asymmetric cryptography in blockchain provides benefits similar to those of traditional encrypted transactions.

Even with these advantages, companies should continue following security best practices, such as rate limitations, encrypting sensitive configuration files, and weeding out vulnerabilities in the development process. The authors of a related 2019 World Economic Forum paper warned about blockchain’s hype and its “exaggerated security expectations.”


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