Blockchain ensures the highest level of security by deploying numerous advanced cryptographic techniques, a mathematical model of behavior, and decision making. Blockchain is the underlying technology behind the most prominent electronic cash transfer systems like cryptocurrencies.
Blockchain is leveraged by various other sectors where data integrity and data confidentiality is crucial such as the financial services sector, the Agritech sector, health care sector, healthcare sector, supply chain management, real estate, and many more.
Blockchain isn’t just a simple concept. To harness the true potential of the phenomenal technology, it is strongly recommended to learn the basic methodology and mechanism of how blockchain ensures the highest level of security.
As you might all aware of the fact the algorithm that powers blockchain makes it immutable, tamper-proof, and secure. To achieve this, blockchain leverage these three defining characteristics:
Blockchain solely relies on cryptography to achieve security. The cryptographic hash function algorithm has the greatest significance in blockchain technology. Cryptographic hash function algorithm is delicately designed in such a manner that it takes the input of any size, and returns the output in the form of a hash value that contains a predictable and fixed length.
The size of output remains the same in the cryptographic hash function algorithm, but the size of input may vary. In case of slight changes to input, the hash value generated by the pre-defined algorithm will be completely changed. However, if the input remains constant, the hash value generated by an algorithm will remain the same. No matter how many times you execute the cryptographic hash function algorithm.
In blockchain technology, the output generated by the hash function algorithm is used as a unique identifier for each block. The hash of the preceding block is interlinked with the hash of the succeeding block, and in this way chain of linked blocks is successfully created.
Cryptography is also extensively used for the consensus algorithm. In the consensus algorithm, verification of the transaction is achieved by the hashing algorithm. In the case of the bitcoin blockchain, proof of work algorithm utilized a specialized kind of algorithm called SHA-256. As the name suggests, a hash function takes the data as an input and returns the hash value out of it that is 256 bits or 64 characters long.
Apart from securely recording transaction records on the distributive ledger, cryptography also plays a vital role in securing the crypto wallets that are used to store the smallest unit of cryptocurrency.
Although many features of blockchain technology play a vital role in extending the security capability of blockchain technology, the most prominent of them all is a consensus algorithm. Consensus refers to the ability of all the nodes existing within the blockchain network to validate the authenticity of the transactions. The ability of the blockchain technology to validate the authenticity of the transaction by the consent of all the nodes within the blockchain network solely relies on the consensus algorithm.
Consensus paves the way for data security and accessibility. The consensus algorithm ensures all rules of the system are properly followed and all the members of the blockchain network expressed their satisfaction regarding the current state of the network.
Decentralized Nature of Blockchain
Blockchain distributes data to the distributive ledger and makes it accessible to all the persons involved in the blockchain network. Whenever you attempt to make a change, the network validates it and then the bitcoin miners add those transactions into a new block, and these transactions are then added to the block of the blockchain. This process is referred to as decentralization.
Blockchain technology is entirely decentralized unlike the state-backed fiat currency therefore it doesn’t contain any flaw or security vulnerability and is more resilient, efficient, and democratic.
Distributive ledger-based blockchain technology can improve the overall security, accountability, and efficiency of any organization. Owing to the peculiar security feature of Blockchain technology, it is capable to disrupt various industries including medicines, health care, fin-tech, pharmaceutical, big data, government, voting, and law.