Crime is a very common thing in the cyberspace.To have a succesful run in such environment it is crucial that the project has a solid security protocol to protect the system from hackers and online thieves.Today we are going to look at ways Bitcoin is able to ensure security in its ecosystem.
The Bitcoin Blockchain
The Bitcoin blockchain has all these built-in features that keep everything together in a very smart and self-correcting way.It's beautiful!!
Digital Signatures:
Every Bitcoin address has its own unique public and private keys which it uses to authorize transactions.A public key is the one that is shared with the public and can be known by anyone since the Bitcoin blockchain does not hide any information.The private key is the one you must ensure that it stays a secret and no one but you has access to it.The private key has an exclusive ability to help with the creation of the digital signature meaning no-one can create a digital signature related to your address without knowing your private key.The address holder is the only one who can create this digital signature and without it the transaction will be deemed invalid;thus eliminating the issue of forging transactions.
Validators:
Validators are the ones who are able to record all the transactions in the blockchain and they create blocks through the process called (Proof of Work consensus).The validators compete with each other in solving a mathematical challenge and whoever succeeds wins the block which them records transactions and the other validators recognise that block and built on top of it.This prevents criminals from creating fake transactions because all the transactions are recorded on these blocks and they are hard to alter.One cannot create a far ahead block and wait to record fake transaction or claim mining rewards because every block needs data from the block preceding it.The term "Validators" is not their official term I just like it because it describes what security purpose they serve;you can also call them bookkeepers or miners.
The 51% Attack:
The 51% attack is the only procedure that can succeed in manipulating the transaction data in the blocks;but this would come at a great cost.This 51% represents the fact that the majority of the network's hashing power must be dedicated to committing this crime of data manipulation.This would indeed get the thieves some free Bitcoins but it is nearly impossible because miners would rather dedicate their effort in service of the network and trying to legitimately win blocks.
Double Spending:
What if someone tries to send Bitcoins to some other address and then tries to send the same bitcoins to another address?hence the term "double spending";well that would be tricky because he/she would need to somehow outwork the other miners following this procedure:
1.Send the bitcoins to address "A" and wait for the block to validate the transaction.
2.After that the scammer must then try to to beat this block by creating a competing block with the longest chain(therefore winning).
3.Then he/she would record the second fraudulent transaction to this new valid block and the other transaction can be effectively wiped off.
This would be close to impossible since now the scammer would have to outpace the miner who already had a headstart.This would take some brains and a lot of resources to pull off.
Yes the Bitcoin blockchain is a self correcting and a self securing system that is so good that it has NEVER BEEN HACKED.It has been able to successfully create defense systems that are able to hold even with the attacking options known;they are just too damn hard to execute!!
DISCLAIMER:THIS IS NOT FINANCIAL ADVISE;IT IS JUST MY TWO CENTS ON THE ISSUE
THANK YOU FOR TAKING YOUR TIME TO READ THIS ARTICLE.
