How the Blockchain Will Improve Data Security

As cyberattacks get more pervasive and sophisticated, securely navigating the online world and keeping our data safe from prying eyes is becoming a huge concern. And with data currently being the world’s most precious asset, cybersecurity professionals are beginning to set their sights on blockchain technology as a potential solution. 

The blockchain is a type of database or shared ledger that allows digital information to be recorded and shared but not copied or tampered with. It was first envisioned by researchers Stuart Haber and W. Scott Stornetta in 1991 to cryptographically secure a chain of blocks where no one could tamper with the documents’ timestamps.

The blockchain initially came into prominence a decade ago as the technology behind the world’s first cryptocurrency, the Bitcoin. In this context, the blockchain is employed to record a ledger of transactions transparently. 

That said, cryptocurrency is only one of the many possible applications for the blockchain. It could be used in theory to immutably record and distribute any data points, including transactions, product inventories, state identifications, payment details, house deeds, and even election votes. 

Here’s how the blockchain will improve data security and the potential implications on particular sectors.

The idea of decentralization predates the blockchain. Unfortunately, most tech giants are way behind the curve, and if Facebook’s Cambridge Analytica data-mining scandal is any proof, this needs to change soon.

Thankfully, the blockchain reliance on decentralization allows users to share data freely without the need for a centralized server to verify the integrity of the data. 

The blockchain's decentralized storage makes hacking it a near impossibility. For hackers to corrupt or destroy a blockchain, they'd need to destroy every copy of the ledger within the global network.

The number of computer systems in bigger networks could be in millions, with each having a copy of some or all of the blockchain’s data stored. 

In the event of a cyberattack, all the undamaged computer systems, also referred to as “nodes”, would keep running smoothly to verify all the data on the network. If any alteration or change in the blockchain takes place, the inconsistency will be quickly detected.

The only way for a cyberattack to be successful would be to bring down the whole network simultaneously, which is almost impossible, even for the most insidious of hackers. This is especially true for more extensive networks, as the larger number of users in a network increases its complexity and, therefore, renders it almost impossible to penetrate.

Despite being a shared ledger, all the blockchain data is encrypted using two different fool-proof cryptographic algorithms.

The first type is cryptographic hash functions, which immutably link the blocks to each other by encoding a unique hash value from the blocks' codes. This also maintains data integrity within each block, as any slight change in the data will result in a different output.

The second algorithm is asymmetric-key cryptography, also known as public-key cryptography. It encrypts the data using a public key that can be freely transferred across unsecured channels and a private key that functions as a unique digital signature. 

Without the private key, no one can access the users’ data, and if the signature is tampered with in any way, it automatically becomes invalid.

IBM estimates that up to 95% of cybersecurity breaches happen due to human error. Thankfully, blockchain technology will be capable of eliminating almost all instances of human error if properly applied. The technology can also mitigate other human error-related issues, including losing sensitive consumer and company data.

The banking and finance industry can significantly improve its security and transparency levels by widely implementing blockchain technology. 

The blockchain boasts many unique security features not present in legacy computer systems that most of the banking sector relies on. Mainly, its decentralized architecture increases its resiliency against cyberattacks and fraudulent activities.

Moreover, since the blockchain is an immutable ledger of transactions, it’ll make falsifying financial records a much more challenging undertaking, thereby substantially reducing the chances of financial fraud.

Additionally, by removing the human element altogether, blockchain technology can help detect and mitigate fraud quicker since nodes will validate transaction records before being added to the blockchain’s ledger.

Implementing blockchain technology in the finance sector comes with additional benefits, such as cutting the time needed to process transactions to only a few minutes, regardless of working hours or public holidays.

The healthcare system also stands to gain a lot from implementing blockchain technology. Healthcare providers can use the blockchain to securely keep their patients’ medical records, adding an extra layer of trust and guarantee that the documents can’t be tampered with or changed once they’re added to the blockchain.

Additionally, the data can be encoded using a private key to give patients more control to decide who they want to share it with and the window of time it can be available.

Therefore, the technology can give patients more autonomy and address the public’s growing reluctance to share their health data due to fears of unauthorized secondary use of their health data and data breaches.

While still a relatively nascent technology, blockchain technology possesses all the attributes needed to have a long-lasting effect on data security in the coming years. The world is already starting to notice how the blockchain will improve data security if implemented correctly, especially in fraud-prone industries such as the banking and insurance sectors. 

Blockchain technology provides a decentralized, immutable, and securely encrypted solution to storing data, regardless of how big the chain is. If anything, bigger blockchain networks are even safer, as there's a correlation between the number of computer systems in a network and its complexity.

However, it’s still important to keep in mind the limitations of the technology. For example, if the data is poorly distributed across a small network, it may still be vulnerable to attacks.