When the hype around a technology reaches a fever pitch, it’s advantages and weaknesses get distorted. But in the case of Blockchain, the advantages it brings to data security and maintaining its integrity is not a myth at all.
Blockchain has been considered as a positive disruptor in the field of finances. The technology has transformed the way assets and financial transactions are carried out. Globally, the Blockchain technology market is estimated to be worth $24 billion by the end of 2024. This fact further showcases the extent of transformation brought to the financial and ledger businesses. The potential of Blockchain is increased due to its inherent benefits of presenting transparency in transactions, the immutability of the data stored within it, and reduced costs.
But the threat to cybersecurity of the financial systems is increasing day by day.
How can Blockchain help in tackling this issue?
Can it present a unique solution to protect sensitive information and maintain the integrity of data while being transparent?
Blockchain may not be a panacea to every problem in the world today, but it sure can help in protecting private and confidential data from being tampered by hackers and cybercriminals.
Cybersecurity Threats Prevalent Today
Cybercriminals use elaborate phishing techniques to get employees to chew their baits and compromise their organization’s security systems. They exploit gullible people by enticing them with links that download malware into the system.
By replicating interfaces to fool people to enter secure passwords and usernames, which is used to siphon off money from their accounts.
Targeting low security based web portals and hacking them to steal crucial data from the portal’s backend.
All these situations are plausible as data is mainly secured in a central location, which becomes a singular point of failure for the organization. Hackers need only one point of entry to completely tamper with the system.
And with many financial institutions working together, their networks are interconnected at some level. As such, giving way for hackers to do more harm.
Blockchain Disrupts This Paradigm
Blockchain presents 4 different aspects of protecting the integrity of the data.
- Encryption and Validation – Once a transaction is initiated, validation of the data block is done through consensus between the network stakeholders, then the data is verified permanently unless any authorized changes are done to the data. Then it is encrypted with the highest level encryption protocols to guarantee data security.
- Decentralized database – The main pain points in the traditional financial digitization is the centrally located database server, which presents a single point of failure. All that hackers had to do is try to get into the system at one point and they could take over the entire system and manipulate it to their wishes. But Blockchain is decentralized, no one node or point in the network holds the entire database. It is a distributed ledger system, where the same copy of the entire database is available at every node of the network, a single node’s failure will not pose a threat to the entire system. The decentralized nature of Blockchain makes it redundant to have any third-party verification of the transaction, as all stakeholders have access to the validated encrypted data.
- Private & Public Blockchain – Public Blockchain has caught the fancy of the majority of the crowd. The permissionless public Blockchain is accessible to anybody, where the security of the data is solely dependent on the first validation and encryption. Public Blockchain empowers anonymity. But the private Blockchain is permission-based. It adds more value to the financial sector where the stakeholders need to explicitly identify themselves and be allowed to access the private network. Adding a level of security to a decentralized peer-to-peer network.
- Immutable and virtually tamper-proof network – While the encryption protects the data. The data blocks are themselves tamper-proof. Even if hackers bring down a few nodes, the system won’t fail because of the failure of a few nodes. Blockchain is a ledger system primarily and once a record has been made in the ledger, every change to that is also time-stamped and recorded. Changing or tampering one data entry or a block will need all its preceding blocks to be modified.
In the current climate where there is a constant threat to privacy and users are not able to completely restrict the usage of their personal info for advertising and marketing purposes, Blockchain gives more power to the users. They become active participants to withhold or exchange information within the network. They become stakeholders.
This can have a huge impact on the management, production, and delivery of goods and services. And could regulate the way organizations will handle sensitive data of all those who engage with them.
Blockchain’s proliferation and widespread experimentation with research are owed mostly to its promise of maintaining high-level data security and as a way to keep hackers and cybercriminals at bay.
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