Decentralization Is Just A Means, Not An End
Information. Knowledge. Data. Intelligence. Call it whatever you want, but in today’s world that is the most valuable resource of all. If one asked a bank employee what they would rather save in case of a fire, they most probably wouldn’t go for safes with gold bars and cash stacks. It would be hard drives. Something as precious as information is today, creates a huge issue of its security. Cybercrime and cybersecurity attacks never seem to be out of the news these days and the threat is growing globally, the leaks growing bigger, bolder and more damaging. According to Cybersecurity Ventures analytics, the damage to industries caused by cybersecurity breaches will reach $6 B dollars in 2021. At the same time, the amount invested in cyber protection will cap $3 B.
Today many experts agree that although centralized platforms may present a better-working business model, management model and development model, one thing they will most probably never excel at is 100% security. While decentralized projects may still lack in features and ease of use, maturity, scalability and privacy, these are rather directions for them to grow in, not limitations. And as for security — they have it. In its purest form, blockchain is literally impossible to hack. This is such a huge advantage for businesses where data security is absolutely vital that it just may cancel out the drawbacks blockchain databases still suffer from.
So, how exactly is this level of security achieved?
In two words, by going public. Blockchain is about protecting data, not protecting privacy. The information kept in a blockchain database — be it a bank balance, deal details, or transaction information, is replicated endlessly, its iterations distributed evenly between a multitude of nodes. To tamper with it, you’d have to tamper with too many copies in too many places, which is practically impossible, as replications would just keep growing, and it takes less time to add a new one than to hack an existing one. In short, decentralization is not what blockchain is about, security is. But decentralization is a necessary means to achieve it.
The logical question to follow would be: so, if blockchain is not protecting privacy and making its transparency a key to its security, how can I keep something private? What if the contents of my stored data itself are valuable or a private matter? Money, bank accounts, copyrighted content? And here’s where another indubitable advantage of blockchain factors in. Anonymity. You don’t have to disclose, for instance, that this money is owned by you. Or that it’s even money, or copyrighted content, or a database with a bunch of names, and addresses, and passport numbers. You can encrypt it and keep ownership as well as the subject matter a secret. This is why nowadays many businesses which work with exactly this kind of data — vulnerable and private, such as banks, legal and medical companies, research institutions, are looking into blockchain as a possible technology to implement for better protection.
Does this mean that blockchain is immune to attack threats?
Not really, but the attack mechanisms are entirely different and much harder to pull off. They are aimed at tampering with smart contract agreement process. To be able to reverse a smart contract as a third party, one needs to accumulate over 51% of “controlling interest” so to say. For Proof-of-Work projects that would be over 51% of blocks, but Bitcoin, for example, operates over 11 thousand blocks. It’s hard to imagine that more than half of them would be controlled by a single mining group at the same time, it’s an immeasurable amount of mining resources. In Proof-of-Stake project this could be achieved by controlling over 51% of coins, which is also unheard of. There were cases of such attacks, for example, Ethereum-based Krypton and Shift in 2016, but introducing a larger number of confirmations necessary for making a transaction valid eliminated a chance to repeat that. Besides, as these cases have shown, the revenue from ‘Act 51” and double-spending is rather negligible considering the amount of resources necessary to pull them off. Big surprise, but honest mining turned out to be more profitable. That’s why when the mining pool Ghash.io reached over 51% of computing power in bitcoin network in 2014 due to its popularity, they made a decision to bring it down and not to allow this figure to reach over 39.9%.
Blockchain demonstrates a fundamentally different approach to cybersecurity which includes the entire business ecosystem. The vulnerabilities of centralized platforms are becoming more evident with the growth of cybercrime levels — and with the growth of success rates of such attacks. Blockchain may not become a silver bullet to kill the werewolf of cybercrime, but with their powerful protection tools they may become a much tougher piece to chew.
