October 10, 2022
As the world begins to rely more and more on technology for education and work, cyber security is a must that can’t be ignored.
With over 167,000 reports from people who said their information was misused on an existing account or to open a new credit card account, it’s clear that fraud and cyber threats are becoming more prevalent across the globe. Privacy Rights Clearinghouse even notes how there’s an average of 1.8 breaches a day, recording over 9,705 data breaches between January 2005 and October 2019.
While more sophisticated technology has now come out to address the threat of fraud and data breaches, a new weapon has risen in the form of blockchain.
Initially used for Bitcoin, blockchain emerged as a real-world option in 2016 and 2017. It’s a distributed ledger technology (DLT) that allows data to be stored on thousands of servers in different parts of the world, and lets anyone on the network see everyone else’s entries in near real-time.
Overall, the way blockchain works makes it a challenge for any single user to gain control of the network. Indeed, FXCM's guide to 'Blockchain Uses Outside of Crypto' emphasises how the technology can be used to help prevent fraud. Due to blockchains being decentralised, hackers find it difficult to find vulnerabilities. Not to mention, we explained in our guide entitled ‘Blockchain Security Benefits’ how the immutability of this distributed ledger also makes it far more difficult to hack, as it would require every single record across the network to be created, altered, or removed.
While blockchains are anti-fraud by design, it’s important to note that like all technology, it is not infallible. It can indeed increase the efficiency of transactions and security, reduce fraud, and add an extra layer of safety — but it cannot prevent cyber threats entirely. Not to mention, it would be unwise to ignore its limitations.
The “51 percent attack”, for instance, can enable a hacker to engage in fraudulent activities. This is where a user, or even multiple users, gains a majority over the power that a blockchain system has. As they are the majority, even by 1 percent, they’ll be able to rewrite transaction histories based on their version of events. Phishing situations can also render blockchains useless, because if a hacker gains access to enough personal details in a network, they’ll be able to compromise the blockchain.
Given enough time, effort, and patience — blockchain can be hacked. Fortunately, individual hackers would probably struggle to carry out a blockchain-targeted attack on their own. Alternatively, teams of hackers are more likely to exploit a blockchain’s vulnerabilities. This is why businesses must come up with a collective and continual response to cyber security. Users too, must take a proactive approach in order to ensure the security of their personal data. Perhaps the most important step is to get rid of the notion or belief that blockchain’s security is unbeatable, and find ways to counter its vulnerabilities instead.
