The Dark Side of Blockchain

The Dark Side of Blockchain

Naveen Joshi 07/11/2018 6
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Although numerous blockchain benefits are providing immense growth opportunities to companies, several risk factors such as security, the nascency of blockchain, and scalability still exist. This forces experts to ask, “how secure is blockchain?”

Blockchain has successfully seeped into various business processes, helping organizations drive technological transformation, disruption, and growth. Functionally, blockchain offers a decentralized ledger, where participants across the blockchain network store data or records. These participants who are associated with the blockchain network have to first validate their identity for authentication before storing the data. This feature of blockchain indicates that blockchain provides high-level security, right? But, in reality, blockchain does not offer total protection. The technology entails several risks, making us question, “how secure is blockchain?”

It is a myth if you say that blockchain is perfect from every angle. Blockchain has flaws too; and organizations should take into account the risks, imperfections, and limitations of the technology before adopting it.

1. Security

Let’s first check the security vulnerabilities that the blockchain contains. For accessing the data that is stored on the blockchain, two keys are needed: a private key and a public key. We can mention the keys as both, a strength and a weakness of the blockchain. Let’s elaborate on this. Without the right combination of these keys, no one can access the data on the blockchain. Not even hackers. Well, that is good news, right? But, wait. We know that a hacker’s love for our data is endless. Their prying eyes hungrily wish to steal our data. Think: what if hackers inject malware to your desktop where you have stored your keys? If they do so, the moment you enter your keys, they can capture them.

2. Immaturity

Blockchain is still in its infancy, leaving many loopholes in the applications of blockchain, of course. True, that blockchain promises to deliver security, transparency, and privacy, but it will take a few years to deliver its full potential. Due to the newness of the technology, organizations lack in-housing the best and long-term ’data security methods and solutions.’ For example, we know that blockchain is primarily aimed at providing non-alterable data, but the security of the infrastructure is still risky.

3. Scalability 

Another issue with blockchain is scalability. Did you know that permissionless based blockchain, Ethereum, roughly handles up to 15 transactions per second ‘only’? Now, you would wonder why we have addressed this as ‘only.’ The reason behind this is, Visa can handle up to 1667 transactions per second on average, indicating that Ethereum takes a much longer time to process requests than Visa, which is the reason why we do not see widespread adoption of this blockchain application. The Ethereum blockchain processes a request only after validating the transactions so that the security factor is met, which is the reason for low-computational power. Hence, the developers should find ways to solve the scalability issues, while not compromising on the security of the processes.

You might have yourself found the answer to ‘how secure is blockchain?’ right? Well, the issues around the technology do not mean that there are only pitfalls. It implies that blockchain needs some time to completely mature and evolve. As the technology matures, the great minds of our developers will come up with savvy solutions to the current burning issues. 

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  • Ross Cooper

    Excellent article Naveen.

  • David Jenkins

    Brillant piece, one of your best articles.

  • Peter Black

    Great read

  • Taylor Wahlquist

    Blockchain is still in infancy and its complexity is one of the main reasons precluding it from going mainstream.

  • Grant Czarnik

    Storing information on blockchains requires significantly more computing power to operate than using their centralized counterpart.

  • Samuel Graves

    The high degree of difficulty to trace back transactions in some networks like Dash and Monero can prove to be problematic......

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Naveen Joshi

Tech Guru

Naveen is the Founder and CEO of Allerin, a software solutions provider that delivers innovative and agile solutions that enable to automate, inspire and impress. He is a seasoned professional with more than 20 years of experience, with extensive experience in customizing open source products for cost optimizations of large scale IT deployment. He is currently working on Internet of Things solutions with Big Data Analytics. Naveen completed his programming qualifications in various Indian institutes.

   
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