Blockchain (distributed ledger) technology is drastically altering the business as well as day-to-day landscapes. Amidst all the transformations this innovative technology is triggering, two distinct consumer behaviors have emanated. The first group is cognizant of cybercrimes and are ultra-cautious, while the second group, less aware of risks, readily trust various types of services and apps. Nonetheless, for blockchain technology to really become an integral part of everyday’s life, the need for solid security features is critical.
Blockchain technology is disrupting multiple industries
The high level of dependency on the Internet and technology today has paved the way for new business models. Blockchain, still perceived as a nascent technology, is, however already poised to become the beating heart of many industries such as healthcare, public sector, energy, and particularly the financial services. Blockchain technology is seen as trustful in terms of traceability as transactions stored on the ledger are deemed to be tamperproof.
The interest in this technology is so high that in 2016, $1 billion was invested in blockchain by both financial services and technology firms globally, according to a report by Deloitte. Such investments are expected to soar exponentially over the ensuing years.
Blockchain is prized for the absence of intermediaries
If blockchain is being able to enjoy a good rating with people globally, it is that because the latter are more willing than ever to find networks without intermediaries to carry out virtually instantaneous transactions. Without the interference of third parties, networks appear more trustful to users. One example of how such network has altered the behavior of people is the use of carpooling apps. Some years, people were wary of jumping into a car with some strangers but today, this is readily done without hesitation.
Blockchain can consolidate the frail financial sector
The conventional financial sector is becoming more and more antiquated. For instance, settlements for purchases are not instantaneous with credit cards; the bitstream has to pass through several layers before a settlement is made. If these layers of verification may be seen as increased security features, they may also be a reason to worry about: the more middlemen included, the greater the risks of attacks, and the more the interference of third parties, the more vulnerable the whole system becomes.
Peer-to-peer systems based on blockchain technology, on the other hand, eliminate the middlemen. Transactions are straightforward, reducing the transaction costs and the need for various payment processes as well. Fuelled by consumer demand, simplified payment solutions like PayPal, Venmo, Apple Pay and Square saw the day.
Blockchain can insulate the notoriously insecure manufacturing industry
It is no secret that the retail and manufacturing industry presents multiple levels of risks, the main one being counterfeiting. The main targets are high margin and luxury goods because of the high price tags and profit margins.
Blockchain technology in the retail system could reduce this risk as each transistor and component can be easily verified or recalled if needed. Retailers will be able to pinpoint the manufacturing stage as well as the location of any product at any time anywhere in the world, while consumers would be able to verify the authenticity of their products through a public ledger.
The entertainment industry could reap huge benefits from blockchain
Blockchain technology has the potential to revolutionize the entertainment industry. Artists could avoid series of complex transactions and become the direct distributors for their content. Working directly with fans could undeniably bring further advantages. Entertainment companies, on their side, could improve copyright tracking, rendering piracy difficult. A public ledger would also ensure that the value of the content is maintained and properly tracked.
Blockchain technology remains an immature technology
Blockchain technology is founded on multiple algorithms such as proof of work or proof of stake. There are several types of blockchain technology too, like permissioned or permissionless. The multifaceted cryptographic protocols can, therefore, prove to be very complex to security practitioners. Their inability to understand data flows properly can result in security risks.
As of today, there is a lack of regulations around blockchain technology. As such, legal uncertainties and grey areas are prevalent. Lack of controls has resulted in hacks in the past; the DAO hack caused the network a loss of $60M.
Key security points to consider when adopting blockchain
Different businesses and industries have different requirements. The core of all these needs remains unchanged though: security has to be at the highest level. The need for resilient security features is crucial, taking into consideration the lucrative nature of cybercrime and the ingenuity of attackers. Many businesses have great confidentiality concerns when it comes to their sensitive data. To ensure that this data remains protected, businesses should give the same profound attention to the protection of access to the data. They have to ensure that only authorized parties can do so.
The next issue is network access. This is not a concern for public blockchains where anyone can access and participate in the network. Private blockchains, though, do require appropriate security controls to protect network access. It is recommended to include security controls directly at an application level.
In a scenario where a hacker does manage to gain access to a blockchain network, and subsequently, to sensitive data, it does not necessarily mean that he can retrieve or read that information. For this, data blocks have to be fully encrypted to effectively guarantee confidentiality.