The Relationship Between Blockchain and Data Security
Bitcoin, cryptocurrency, cyber and data security, blockchain, Ether, Litecoin, Stablecoin, Libra, fintechs, and the list goes on and on. As the times change and people create new things, it’s easy to find ourselves in an echo-chamber of buzzwords that bounce to-and-fro between media sources without fully understanding what they mean. How can we stay up to date while maintaining a sturdy understanding of all these new technologies, terms, and inventions? Easy. Just think about each one in relation to one another. For example, let’s examine the relationship between blockchain and data security.
The thing is, none of these new developments exist in a vacuum. Each one has many different applications that affect many different aspects of our lives, and they influence one another as well. Blockchain was invented as a platform for Bitcoin, and few people truly understood what its other potential applications were. As we’ve come to understand very well, blockchain, by nature, is one of the most promising tools that companies and organizations can use to improve their data security. How is that, and what is the relationship between blockchain and data security?
A Brief Rundown of the Blockchain
In order to truly understand the relationship between blockchain and data security, we need to answer this question: what exactly does blockchain do, and why is it even here?
As previously mentioned, blockchain was invented as a platform for Bitcoin, the world’s first cryptocurrency, to inhabit. Since Bitcoin is a decentralized currency, it didn’t have a medium to flow through when a transaction took place. Traditional debit transactions make their way through several middlemen on their way from your bank account to the destination account. A brief example of this would be purchasing your lunch from a local deli.
The second you swipe your card and enter your PIN, your card information is captured by the deli’s computer and sent to your bank. The bank then approves the transaction and this authorization is sent back to the merchant’s computer. After that, the merchant’s computer sends the transaction to the payment processor (MasterCard, Visa, etc.), and the payment is finalized and the amounts are allotted. Although this sounds like a lot, this process is completed at an incredible speed.
Bitcoin and other cryptocurrencies are different because they don’t need these middlemen to verify transactions—that’s why the blockchain was created.
Blockchain completes transactions by sending them across a large network of computers. Each computer, or “node,” in the network verifies the transaction, they’re rewarded for their proof of work, and the transaction is complete. The people who verify these transactions are called “miners,” and it’s their job to create blocks and add them to the blockchain. Blocks are like the detailed pages of a ledger, and once they’re created, they can’t be altered or deleted.
So, what’s the relationship between blockchain and data security, and what does all this have to do with business?
The Relationship Between Blockchain and Data Security
As previously mentioned, blockchain can be thought of as a detailed ledger spread across a broad network of nodes. This means there are several different copies of each piece of data within the blockchain, and that each have been verified by the nodes. Once each node has verified the data, the information is essentially set in stone and is very difficult to alter or remove. This is because it’s very easy to crosscheck a piece of data at each point in the chain because the copies are all stored in different places. If someone does change a copy of the data within the chain, the signature is automatically rendered invalid.
Another reason blockchain is revolutionary in the data security industry is because the data stored in the blockchain is decentralized. Each computer, or node, in the network has a complete copy of the information, and it cannot simply be accessed from a central point that has complete authority over the data. Blockchain works by cross-checking and verifying the information by way of a consensus of sorts between the nodes.
This quality makes hacking information stored on the blockchain extremely difficult compared to traditional data storage methods. With the traditional methods, all an infiltrator has to do is breach the security of one central data repository. Blockchain doesn’t have a single point of failure, and the data in the blockchain is automatically synced and cross checked between each of the nodes. The data can’t even be changed from a single computer. This makes hacking into the blockchain and altering or corrupting the data stored on it is extremely difficult.
The relationship between blockchain and data security is one of the most important topics in the world of cybersecurity and cryptocurrency these days, and a lot of businesses are finding great value in implementing a blockchain system to store their most sensitive data.
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