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Blockchain and Bitcoin Offer New Approach, Risks to Cyber Security

Cyber security is now appropriately viewed as a major threat, particularly with regard to its implications for economic and sociopolitical damage to societies around the world. Currency manipulation, identity theft and fraud on a massive scale, and web-based espionage are all among the possible calamities that black-hat hackers can bring about, if given the opportunity.
In the financial arena, certain alternative techniques have been developed to help reduce the chances of costly security breaches. The cryptocurrency known as Bitcoin is a global presence now due to its highly secure nature – which stems from the use of information transmission and encryption techniques that comes together in what is known as a blockchain. In the wake of Bitcoin’s rise, blockchain is being adopted in many other industries, to securely deliver data in a series of encrypted transmissions that are extremely difficult to trace.

But what might the risks of these methods be? Bitcoin, in particular, has been viewed with some dubiousness, as it’s not uncommonly deployed in black-market purchases. And although blockchain is a known quantity as the driving force of Bitcoin, some remain skeptical of its efficacy outside of financial matters. Regardless, it is quite clear that these subjects will remain prominent in the cyber security conversation for the foreseeable future, and thus anyone with an interest in becoming an information security professional must understand their core tenets.

Bitcoin’s mysterious origins

No one has definitively identified the man credited with Bitcoin’s creation, Satoshi Nakamoto. In 2008, he released a nine-page abstract that explained the Bitcoin process as something akin to a peer-to-peer file-sharing system – a Napster for money. Its security stems from the financial transactions being broken down into unique “blocks” that are nearly impossible to infiltrate or duplicate, and these blocks form a chain between users to securely deliver Bitcoin funds. No two blocks are alike, which also means that there is a finite number of Bitcoins circulating at any given time, the World Economic Forum (WEF) explained.

Nakamoto remains an enigma, having disappeared from the various conversations surrounding Bitcoin’s early development and proliferation in 2011, according to The New Yorker. Five years later, an Australian tech entrepreneur named Craig Wright claimed that Nakamoto was his alter ego, but few believed him and he too disappeared from public life not long after his announcement.

Multiple applications of blockchain

The possibilities present in blockchain technology are the major reason behind investors’ and entrepreneurs’ embrace of Bitcoin. Writing for the Huffington Post, Vala Afshar, a leading tech executive at Salesforce, explained that identity verification, shipping and supply-chain logistics, manufacturing, prescription drug regulation and many more processes can all be enhanced and better safeguarded through blockchain implementation.

In what could serve as a succinct argument for the pursuit of blockchain development, Afshar wrote, “Blockchain [has the] ability to digitize, decentralize, secure and incentivize the validation of transactions.”

Impediments to blockchain growth

As is the case with so many new technologies or concepts, doubt regarding its efficiency – as well as comfort and familiarity with existing methods, leading to wariness of change – currently serves as the main driver for blockchain skeptics.

According to Quartz, parallels exist between the growing excitement around blockchain and the speculation that fueled the late 1990s/early 2000s dot-com boom. Hindsight shows us how that didn’t turn out well for a majority of its participants, with only the most aggressive businesses and dynamic products becoming mainstays of the technology industry. It could well be that hundreds or thousands of companies and entrepreneurs all try to develop blockchain systems and most fail, leaving a select few at the head of the pack – although to some extent that is true of many segments of the free market.

Blockchain isn’t fail-safe

It’s true that the randomness of the data transactions within blockchain’s context, and their strong encryption, means that neither the blocks nor the chain can be duplicated or infiltrated using malware or other exploits. However, according to Lexology, if the information at one end of the chain is fraudulent or incorrect, you end up with fraud or error for which the other party has no means of override, unlike wire transfers or card transactions that can be stopped while pending if malfeasance is quickly detected. In a nutshell, a white-collar criminal could take advantage of his or her peers’ excitement about blockchain to commit entirely secure acts of fraud that might not be discovered for days or more.

Trust lies at the foundation of all human interactions, including business deals. Companies using blockchain are justified in adopting a method that’s already showing itself to be a game-changer and has the potential for even greater successes in the future. But if these businesses’ leaders do so in an overzealous fashion and don’t conduct due diligence with potential clients or partners, they open themselves up for exploitation. Because of this, the growth of blockchain can’t be easily projected, but there’s little doubt it will somehow remain part of the greater tech landscape.

Recommended readings:
How to create a strong password and why it’s crucial
Even with EMV technology, are credit cards safe?

Sources:

http://www.huffingtonpost.com/entry/blockchain-will-disrupt-every-industry_us_5963868ce4b08f5c97d06b55

https://www.weforum.org/agenda/2017/05/what-is-bitcoin

https://bitcoin.org/bitcoin.pdf

http://www.newyorker.com/business/currency/we-need-to-know-who-satoshi-nakamoto-is

https://www.weforum.org/agenda/2017/05/what-s-driving-the-bitcoin-boom-here-s-what-you-need-to-know/

https://www.economist.com/news/briefing/21677228-technology-behind-bitcoin-lets-people-who-do-not-know-or-trust-each-other-build-dependable

https://qz.com/1020326/how-is-blockchain-technology-used-in-the-real-world/

http://www.lexology.com/library/detail.aspx?g=ad5544a6-a8ab-40fe-886b-15bf4a316947