Bitcoin is the first and best application of blockchain. The main aim of using blockchain is to allow people to share their valuable data and funds in a tamper-proof way. People, who don’t trust financial institutions and the government, can transfer their funds using Bitcoin. Bitcoin is based on blockchain, uses cryptography and stored data in an innovative way using complicated mathematical rules that make it impossible for anyone to counterfeit data. You can get bmmagazine.co.uk about blockchain and enhance your knowledge.
People trusted blockchain because it promised to provide a secure network, but sometimes it fails at certain places where humans cannot work according to software rules and complicated math. Let us understand why blockchain fails at times and what makes it secure. Bitcoin is the best example of blockchain, and blockchain records every single transaction that ever happened in the bitcoin network.
Blockchain is an accounting ledger that has a history of all bitcoin transactions. In the blockchain, there is a network of computers that involve thousands of computers, and each computer has a copy of the accounting ledger. The computers in blockchain are known as nodes. Each time a user initiates a transaction, it is submitted to the ledger, and all the nodes in the blockchain validate the transaction. The transactions are collected into blocks, and blocks are added to the blockchain. The individuals that are the owner of the computers are known as miners. Miners do the work of adding new blocks, and they earn block reward in return.
What makes blockchain tamper-proof?
There are two main things that make blockchain tamper-proof that include cryptographic principle and consensus method that is the method by which the computers/nodes in the bitcoin network agree to share the history of all transactions. The cryptographic fingerprint is unique to each block that is known as a hash. It takes computing power, energy and time to verify and validate the transactions. The consensus method serves as proof that miners verify the transaction. They have added blocks into the blockchain by doing all the computational part to earn block reward.
Bitcoin uses the proof of work consensus method, which makes it difficult any anyone from tampering with the blockchain. Every hash must match the block number, and it will make it easy for all nodes to be updated the copy of the blockchain ledger with each new block that is generated. Each block in the long chain of blocks contains the unique hash of the previous block, and in this way, the blocks are arranged in the blockchain. If any hacker tries to change any transactional data, then they need to calculate the new hash for all the blocks and not only for one block, which is nearly impossible.
Any manipulation will conflict with other blocks that already exist, and the nodes will reject all the alternations, and this makes blockchain incontrovertible and tamper-proof.
What are the other ways through which attackers can attack or cheat?
Despite learning the theory, let us understand about implementation or work, which is a bit hard. Bitcoin and other cryptocurrencies promise to provide a safe and secure environment but aren’t as secure as it is mentioned. Bitcoin has been in existence for more than a decade, but it has struggled a lot in the market. Hackers and scammers found new ways to cheat the system and try to hack the bitcoins. Miners are the most trusted individuals that also sometimes become selfish and mine bitcoin from unfair means to take advantage and earn block reward.
Another way in which miners cheat is through eclipse attacks. All the computers on the blockchain are required to communicate constantly to keep themselves updated by comparing the data. Sometimes attacker attacks by hacking the nodes and controls the communication between them and foots everyone into verifying and validating false data to confirm false and fake transactions.
There are several ways to protect your data and funds, and therefore, each bitcoin use must use proper security measures to protect their wallets. This is because crypto wallets have become the main target of attackers. Users must choose to store their digital tokens in cold wallets as these are safe way because these are disconnected from the internet.