When it comes to online security, nothing is foolproof, though Digital Ledger Technology (DLT) like blockchain comes awfully close.
Its potential has been realized by two Australian banks, who have already implemented the technology. So too have several Indian states, as well as U.S. defense contractor Lockheed Martin.
The increasing popularity of DLT has led to increased investment, with the potential for even more on the horizon. CSO cites Transparency Market Research indicating that the DLT market is expected to reach $20 billion by 2024, and Gartner projections that put the value at $176 billion by the following year.
What is DLT? It is a decentralized ledger — i.e., one that requires neither a vendor nor service provider (e.g., a bank) — the use of which was best illustrated by MIT Technology Review using the popular cryptocurrency Bitcoin, which is powered by blockchain
In blockchain (as in all forms of DLT), the ledger is shared to multiple computers, called nodes, giving each node the opportunity to verify every transaction. A certain number of owners of these nodes (or miners, as they are often called) then vie to combine legitimate transactions into “blocks” that can be added to a chain of those that came before.
Each block features a cryptographic fingerprint known as a hash, one line of defense against hackers. The hash is a result of considerable computing time and effort, and leads to a bitcoin reward; hence the notion that the cryptocurrency has a “proof-of-work” feature.
Any changes to the block require that the miner conjure up a new hash, and the other nodes verify its validity, then update their blockchain duplicates. According to the MIT site, this is known as the consensus protocol, another feature making blockchain largely impervious to attacks.
Moreover, the hashes serve as links to each other in the blockchain. Any enterprising hacker would therefore have to change not only a single block’s hash, but those of the others in the chain. And that would require controlling at least 51 percent of the computers in the same ledger.
IBM.com notes that any attack to a blockchain, whether that blockchain be public (i.e., connected to the internet) or private (a business network accessed by permission only), is nonetheless possible — that a blockchain’s infrastructure is a big determining factor in just how secure it is. IBM recommends platforms featuring security protocols that severely limit access to critical information, as well as encryption keys.
The MIT site nonetheless cautions that even the most impregnable security systems can be pieced together in such a way that there are vulnerabilities, and added that experts have found ways to circumvent blockchain’s safeguards — one being the creation of a “selfish miner” that can fool the legitimate ones.
Also noted by the folks at MIT are the possibility of an “eclipse attack,” during which a hacker tricks one node into accepting seemingly legitimate data from another node, and incursions into “hot wallets,” one of the touchpoints between a blockchain and the real world.
It should be pointed out, however, that one limiting factor to blockchain is its speed — or better put, lack of speed. It is slow by design, with its proof of work and digital mining protocol slowing transaction volume to just four transactions per second.
Exciting new, next-generation DLT platforms such as Hashgraph hold the potential to displace blockchain, offering improved benefits that include lower transaction costs, less documentation and bureaucracy, greater mitigation of fraud and errors in transaction processing, improved tracking and an increased ability to understand and utilize data and analytics. Moreover, Hashgraph in particular offers unparalleled speed, having a capacity to securely process up to 500,000 transactions per second – a profound improvement over blockchain.
Powered by its proprietary “gossip about gossip” protocol, Hashgraph is actually not a blockchain, but a simple elegant algorithm, mathematically proven to achieve consensus and is implemented in software. It is also widely viewed as the industry’s most secure, due to its decentralized distributed ledger which allows for “asynchronous” byzantine fault tolerance — the true gold standard for security in distributed systems.
In sum, DLT — be it blockchain, Hashgraph or other emerging advanced DLT platform — is as secure as it gets in the online world, because of its decentralization and fail-safe features.
As a result, the demand for distributed ledger solutions is fast outpacing the supply; thus growing acceptance of cryptocurrencies as legitimate forms of tender is fueling a fevered need for user-friendly payment applications, application development solutions and specialty products and services to better support and secure the burgeoning crypto ecosystem while reducing current risks. All are solid reasons why smart investment dollars are flowing into the space — including several of my own.