How Safe is Blockchain? Blockchain Security Guide
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How Safe is Blockchain? Blockchain Security Guide
It hasproven to be a powerful technology for protecting the integrity of vitalinformation. But that doesn’t mean it’s entirely safe.The technology has becomeincreasingly prevalent in recent years as the cryptocurrency markets have movedtoward center stage. One reason for its rapid adoption is that blockchain isdesigned to offer unparalleled security to digital information.
In its shortlife, blockchain—also known as distributed ledger technology—and thecryptocurrencies it powers has seen its share of successes and failures. And asits applications spread, blockchain security has become more important—and notjust for cryptocurrency investors.
Blockchainuses a decentralized, or distributed, ledger that exists on a host ofindependent computers, often called nodes, to track, announce, and coordinatesynchronized transactions. This differs from traditional trading models thatrely on a clearinghouse or exchange which tracks everything in a central ledger.
Each node inthe decentralized blockchain constantly organizes new data into blocks, andchains them together in an “append only” mode. This append-only structure is animportant part of blockchain security. No one on any node can alter or deletethe data on earlier blocks—they can only add to the chain. That the chain canonly be added to is one of the core security features of blockchain.Byreferring to the chain, participants can confirm transactions. It cuts out theneed for a central clearing authority.
HowBlockchain Security Prevents Double Spending
Forpayments and money transfers, blockchain is useful in preventing“double-spending” attacks. These attacks are a core concern forcryptocurrencies. In a double-spending attack, a user will spend theircryptocurrency more than once. It’s an issue that doesn’t arise with cash. If you spend $5 on asandwich, then you no longer have the $5 to spend. But with crypto, there’s arisk that a user will spend the crypto multiple times before the network findsout.Blockchain helps prevent this. Within the blockchain of a givencryptocurrency, the entire network needs to reach consensus on the transactionorder, to confirm the latest transaction, and to post them publicly.
Bitcoin wasthe first form of crypto to solve the problem of double spending. And it servesas an example of how blockchain helps preserve the integrity not just ofcurrency, but of records as a whole. If someone wanted to spend the exact samebitcoin in two places by sending it to two recipients simultaneously, then thetwo transactions would first go into a pool of unconfirmed transactions.
The firsttransaction to be confirmed would be added to the coin’s blockchain as the nextdata block in its transaction history. The second transaction—being connectedwith the block in the chain that had already been added to—wouldn’t fit intothe chain, and the transaction would fail.