Why Blockchain Cannot Be Hacked No Matter How Hard You Try
Many people claim that cryptocurrency as a general concept will never succeed.
If it threatens banks, then it will fail because those who run the banking system will do something to stop it, they say.
This is simply not true. Anyone making statements about the vulnerability of blockchain doesn’t understand the basics of how it works.
Despite the massive publicity garnered by Bitcoin and blockchain technology over the last few years, a large amount of misunderstanding and ignorance remains.
The blockchain is poised to impact the world in dramatic ways. Indeed, it already has.
For this reason alone, it’s worthwhile to take some time to understand the nature of blockchain.
Blockchain has the potential to revolutionize economic and social systems, among other things.
A report released by the Economic Forum recently made the bold prediction that by 2025, over 10% of global GDP could have something to do with blockchain technology[1].
This is good news for developers and early adopters. It also means that no matter what you do, there’s a very good chance that some part of your life will soon be affected by blockchain tech.
So, it’s good to know that for the most part, blockchain is a very secure technology.
Distributed Ledger Technology is Difficult to Compromise
In essence, blockchain cannot be hacked. That is, an attacker can’t directly access the network of an individual coin or project and steal funds from it.
It’s simply not possible because it would require attacking every single node or miner on the planet.
Part of why blockchain cannot be hacked is due to the fact that blockchains are distributed.
Distributed Ledger Technology (DLT) does not exist in any centralized location that can serve as a single attack vector.
There’s not a big server warehouse somewhere that can be infiltrated or compromised.
Large mining operations are somewhat like this, but they are still spread throughout the world, and if you attack one, others will pop up elsewhere.
All of this being said, no technology is totally invulnerable, especially one that is as new as blockchain.
Blockchain Cannot Be Hacked…Or Can It?
There are always exceptions to the rule. All technology has a way of being compromised, and with the exploding market cap of cryptocurrencies[2] the reward for potential attackers have never been higher.
However, in the nearly ten years that blockchain technology has existed, very few successful attempts have ever been made.
One of the most infamous examples of a cryptocurrency being compromised[3] is that of the DAO (Decentralized Autonomous Organization) in June of 2016.
The DAO Proved Ethereum’s Vulnerability
The DAO was an organization without a leader built on Ethereum smart contracts. The original intent of the project was to allow anyone to invest in the company and be able to make their voice heard when it came to what projects they wanted to be funded.
All of this was supposed to have been managed automatically and securely by the smart contract code of the DAO.
This code involved something called a “split return” mechanism that would give users their Ethereum (ETH)back if they wanted to cash out their DAO tokens.
It was this part of the code that an attacker was able to use to steal tens of millions of dollars’ worth of ETH tokens.
James Risberg of Coincentral explains:
Once the plan was made, however, it was realized that it would not fly and a hard fork would be necessary.
This was controversial and resulted in the creation of Ethereum Classic (ETC), a continuation of the original Ethereum chain with the DAO hack in place, and Ethereum (ETH), the newly hard forked project that continued to DAO another day.
Of course, the DAO is a rather unique example. Most coins do not have the kind of weak, unique code in place that can be exploited like the DAO did.
A 51% Attack is Technically Possible
If 51% or more of mining operations are under the control of a single individual or group, they can take control of the network.
In the second half of 2016, a group of hackers called “The 51 Crew” managed to do just that to two new cryptocurrencies. One was called Shift, the other Krypton.
The hackers took the respective networks hostage and demanded ransom. When the project teams refused to pay, the hackers hard-forked the blockchains and took large amounts of coins.
This is the only known example to date when a successful 51% attack has occurred. There are several other ways that cryptocurrencies can potentially be disrupted as well. These are only two of the most commonly talked about methods.
The DAO incident is one of the largest realized crypto hacks in history. And the 51% attack on Shift and Krypton was perhaps the second largest.
Blockchain Cannot Be Hacked Without Quantum Computers
The final and most fatal vulnerability of the blockchain is the invention of quantum computers.
Because quantum computers can process hashes infinitely faster than anything that exists today, they could hack into the blockchain with ease.
But most experts believe quantum computers are a long way from becoming reality. And when they do finally get created, the Bitcoin protocol[4] can simply be updated with post-quantum algorithms, as described within the FAQ section of Bitcoin.org.
Read Next: What is Blockchain & How it is Going to Transform Social Media?
Why Blockchain Cannot Be Hacked Today?
Now you have an elementary understanding of why blockchain cannot be hacked. The only successful cases of hacking a blockchain so far have been the result of shoddy programming and unnecessary vulnerabilities.
This says nothing of the all but indestructible nature of blockchain itself.
While the DAO hack proved that programming inconsistencies can be exploited, and the Shift and Krypton hacks proved the feasibility of a 51% attack, these are unique circumstances that most cryptocurrencies have so far avoided.
All things considered, while it is possible, it’s very difficult to hack blockchain tech. And as time goes on, even more, resilient features will be added to harden and improve this new technology.
Feature image: shutterstock.com
In-Post Image: hackernoon.com, shutterstock.com
References
Disclaimer
The writer’s views are expressed as a personal opinion and are for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.More Posts
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