Bitcoin is covering the market interest at a faster pace. Still, people have many doubts regarding the security of digital assets. Bitcoins run on blockchain technology, ensuring the strictest form of security for data transactions. When the world is welcoming the new trend of making money, why would you stay far behind? Here, you can clear your all doubts regarding the security aspect of blockchain technology to invest in bitcoin and other cryptocurrencies.
What is blockchain technology?
Blockchain technology is one of the reasons behind the huge popularity of bitcoin. The technology runs virtual currency, maintaining a high level of security. It is a platform for tracking and trading your digital assets, and it records transactions of cryptocurrencies, such as Bitcoin, Ethereum, and more. The technology can also store other forms of data, medical records, and more.
Blockchain is a digital ledger that is open to the public. With the help of this technology, users can make and record details about transactions. Every data here is saved on blocks. So, this is what blockchain technology is.
How safe the technology is?
Blockchain is nothing but a series of blocks where data is stored. It maintains tough security as each block has a unique hash number and a link that connects it to the previous block. Every block holds importance in the chain, and the user cannot change a block. When any change happens, the hash sum would also change, making the block invalid. So, this enhances the security of the blockchain, and there are other aspects also that make the blockchain safe. With blockchain, data cannot be changed, which is a sign of a high-security level.
Cryptography: Cryptography secures all blockchain transactions. There is a unique and private key for each block, which can be verified by a public key. If there is any change, the block’s unique key will be invalid. The block is also removed from the chain.
Decentralization: Blockchain works on the distributed and decentralized network. It simply means that the blockchain distributes the same information to every node or user on the network. For any change or transaction, the network first validates it and a new block is created and added to the chain. A change in one block needs changes in every subsequent block. Otherwise, the network will identify your fraudulent behavior and remove changes. It is really impossible to make any such attempt because thousands of nodes confirm or validate new blocks.
Consensus: It works as the brain in the blockchain. It takes the decision of which blocks to be added to the chain. It follows a complete process to maintain the best security standard.
- Nodes first validate the blocks
- Miners (nodes that update block chain) solve the cryptographic puzzle and share the solution with the network
- When nodes agree to that solution, that block will be added to the blockchain network.
Consensus depends on the proof of work, ensuring that each block goes through a complex, mathematical process before becoming a part of the blockchain.
Although strict security is implemented, the risk is still there. Centralized institutions that communicate with blockchain can lower the security level. Hackers target this centralized communication that includes a single point of failure.
Here are the key points to remember:
- Each transaction is recorded as the block of chain on a blockchain network
- Each block creates a chain of data when ownership changes or assets travels from place to place digitally.
- With each block addition, it enhances the verification of the previous block. It creates an irreversible change where you cannot edit data.
A cryptographic system makes the blockchain safe because once a block is created, it cannot be modified. This makes people unable to reverse any transaction. Besides, the decentralization process allows thousands of nodes across the world to track the transactions, making hacking difficult. So, blockchain is, so far, safe technology for your digital assets.