Cryptocurrencies and Blockchain remain a mystery for the majority of the population. And even those that are familiar with the technology often ask themselves this question. So — is it possible to hack Blockchain?
Blockchain experts are considering various security threats, and below we will showcase a few.
A lot of experts are pointing out that hacking the Blockchain may not always be the result of outside malicious actors trying to breach into the system — sometimes it can be the case of bad actors actually taking control of the nodes and ownership stakes in a particular blockchain system.
A typical example of this is the “Sybil attack” — where someone with access to multiple nodes could trick the Blockchain by creating false identities.
According to James Risberg from CoinCentral, here are the details of this type of theoretical attack:
“A Sybil attack is an attack in which a huge number of nodes on a single network are owned by the same party and attempt to disrupt network activity through flooding the network with bad transactions or manipulating the relaying of valid transactions.”
But this sort of attacks is countered by different mechanisms. For example, Bitcoin uses Proof of Work (PoW). Blockchains typically use either Proof of Work, Proof of Stake or Proof of Ownership algorithms to find out whether a particular node can be trusted and how to evaluate their input. Still, dishonest and unverified participation in the network remains one of the biggest security issues for Blockchain.
The Blockchain Ecosystem
Although the decentralized node system has good security, there is an idea that all cryptocurrency transactions are not safe, for example, those to and from the exchanges.
While the security of the most cryptocurrencies remains intact, the wallets, exchanges and the majority of third-party services around these coins remain poorly secured. Millions of dollars in the cryptocurrency have been stolen from the compromised accounts over the years.
Hacking the Blockchain
As the Blockchain community continues to secure and validate the system, they are taking extra steps to deal with unauthorized access.
A good example is the “Byzantine Generals” delegation algorithm. This interesting technique relies on metaphors from the past — concretely, the conjoined actions of various individual generals in the field of battle.
In this system, experts talk about the outcomes of the different player choices — compared to generals agreeing to advance or retreat.
Here’s how Medium user Ameya explains Byzantine Generals:
“In a peer-to-peer system, nodes often replicate data for better security, availability, etc. In order to replicate this data, it is important to place this data on unique/distinct nodes, with a majority of them being correct/honest/well-behaving nodes. But a local node cannot know if the remote node is honest or not. In addition, how would a local node know that the same remote node is not presenting multiple identities? … the central question is: In the absence of a central authority, can a correct node establish the uniqueness of identities presented by another remote node? This remote node can be [a] correct/honest node or a faulty node i.e. for the correct functioning of the system, it is not desirable for a remote node to be able to present multiple identities.”
Basically, the lack of consensus ruins those old generals’ plans — and lack of consensus hurts blockchain participants because it jeopardizes security.
After all, it mostly comes down to verifying cooperation, and a little bit fending off hackers that try to breach it from outside. Experts for blockchain consensus have wondered whether consolidating power in the hands of a couple of wealthy holders might pose challenges for blockchain systems in the future.
In order to stay safe, make sure you carefully check where you send your coins and how. And as far as the blockchain security goes the community is working hard to establish better systems that will increase speed, security, and convenience to our peer-to-peer transactions in a global world.