The five main threats facing Blockchain.
Pros of blockchain
Blockchain and Bitcoin crypto currency as quintessential technologies have become one of the main trends in the IT market in the last 3-4 years. Most blockchain protocols are designed as decentralized peer-to-peer networks that allow members to jointly store and run data processing without compromising security and confidentiality.
Blockchain technology is useful in those areas where many participants are involved and the minimum of intermediaries is required, which is why such projects are implemented in insurance, healthcare, government.
Blockchain reduces costs for bureaucracy and minimizes the risks of corruption, ensures the safety and security of data, and eliminates unnecessary or surplus operations. Not surprisingly, not only authorities, but also business are actively asking for blockchain.
Case 1
One of the most striking examples was the creation of the banking consortium R3 CEV, which has already managed to test the blockchain technology for banking structures. They were attended by BMO Financial Group, Credit Suisse, Commonwealth Bank of Australia, HSBC, Natixis, Royal Bank of Scotland, TD Bank, UBS, UniCredit and Wells Fargo, who exchanged records for five days in a distributed database on open blockchain technology.
Case 2
Another example is the Canadian bank ATB Financial, thanks to the integration of the IT payment solution and the cloud platform that successfully transferred to Germany in 20 seconds, while the traditional processing of such a procedure due to settlements with the counterparty bank and reconciliation of accounts usually takes two Up to six business days.
Case 3
However, among businessmen there are also skeptics. In the spring of 2017, the debit payment online platform PayPal refused to use blockchain, giving preference to traditional DBMS. Representatives of PayPal called Bitcoin 'a speculative financial instrument subject to high volatility.'
However, this does not negate the popularity and relevance of Bitcoin. However, few people realized how much blockchain technology is safe. And the market already has vivid examples of how a blockchain can be manipulated.
Threat 1. Cartel collusion
According to blockchain.info, the miners who extract Bitcoin produce 450 thousand trillion calculations per second. Every attempt requires energy. Each year, Bitcoin takes 2 terawatt hours (which is more than a 150,000 city in California) to 40 terawatt hours (two thirds of the consumption of the 10 millionth Los Angeles County).
In the US, every Bitcoin transaction costs about $ 6, and as a result, most miners open 'farms' in countries with cheap electricity.
According to bitcoinity.org, in February 2016, the top producers of Bitcoin looked like this:
Antpool - 25.90%,
F2pool - 22.60%,
Bitfury - 15.09%,
BtcChina - 12.78%,
Bw.com - 6.34%,
Other - 17.29%.
Four of the five listed miners, with the exception of Bitfury, have a Chinese 'residence permit.' This raises the risk of 'cartel collusion' and '51% threat', as well as raises the question of motivating companies actually controlling the system - their interests may differ from the interests of people holding assets in Bitcoin. Finally, no one has abolished political risks and the influence of Chinese regulators on the Internet industry.
Threat 2. Shuttle run
At the moment, the main threat for blockchain, even hypothetical, is '51% attack', when an attacker can roll back transactions by printing alternative blocks and guaranteeing that what happens in a normal blockchain is guaranteed. In fact, it's like a shuttle race.
However, given the resource-intensive solution of the hash function and the release of new Bitcoin, so far this option seems unlikely. The collusion of the owners of the largest mining pools also looks unconvincing (if you do not take into account the statistics of the largest producers of Bitcoin).
But similar examples already were: one of the pools - ghash.io - gained power close to 50%, after which the owners stopped accepting new users, so as not to create a compromising situation.
Threat 3. A controlling stake
Different blockchain technologies use different methods for confirming blocks. For example, Bitcoin uses the method of proof-of-work, which is the confirmation of blocks by processing power.
Another option for closing blocks is proof-of-stake, where blocks are printed not by computing power, but by money held by people in their hands. In this case, to conduct a '51% attack', you need to have 51% of coins turning around in the system.
As in the case of 'shuttle run', if an attacker owns more than 51% of coins, he can also create an alternative chain that will turn into the main one. This situation resembles a vote at a shareholders meeting when one of the owners has a controlling stake in their hands blocking the votes of other holders.
Threat 4. Keys from all doors
If the security of Blockchain causes a minimum of fear, then the safety of Bitcoin, on the other hand, raises many questions, because, like ordinary paper money, you can also steal a crypto currency. The record key in Blockchain is a hash function from the public key.
Uncertain or careless storage of the private key can lead to theft or loss of Bitcoin. According to Harvard Business Review, the cost of lost Bitcoin is already about $ 950 million.
The easiest way to protect yourself is to create a purse password. But if the hacker abducts both your wallet and your password, it will be almost impossible to recover the stolen Bitcoin, since the transactions presented with the stolen keys seem to the checking nodes to be indistinguishable from legitimate transactions.
Some skeptics argue that hackers will be able to crack the key using services that calculate passwords by hash. However, given the current computing power, this looks unlikely. But if an algorithm appears that allows you to efficiently factorize elliptical curves, then there is a possibility that you can easily pick up private keys to the purse addresses from which money was spent.
Threat 5. Attacks on exchanges
Equally important is the reliability of exchanges that store crypto-currencies. In August 2016, from the Hong Kong Stock Exchange, Bitfinex, one of the world's four largest crypto currency trading platforms, 119,196 Bitcoin (about $ 65 million) were stolen.
Bitfinex has a reputation for being one of the most reliable and secure organizations: most of the user tools were stored in multi-signature purses and in 'cold storage'. Despite this, the attackers managed to circumvent Bitgo's protection, including two-factor authentication and the multi-signature mechanism, and commit mass theft from individual users' wallets.
The details of the hacking have never been reported to the general public, but the media has been replicated about the possible involvement of Bitfinex employees in hacking, which raises the question of the human factor again.
To be continued ...
This list of problems is not limited. Last summer, the Ethereum crypto currency, built in the Turing language by Vitalik Buterin, suffered from a 'counterparty' - the Decentralized Autonomous Organization.
DAO is a digital company or a virtual hedge fund, the share of which can be obtained by investing personal funds and buying DAO-tokens on them - was a victim of their own shortcomings. In the DAO code, vulnerabilities have been identified that allowed to steal tokens.
Ethereum had to implement a hardcore and carry out a reverse token return. Problems with security in Ethereum was not, however, the project suffered reputational losses due to shortcomings of the DAO.
Simultaneously with Blockchain, other technologies are developing, and the degree of their influence and danger is not yet fully apparent. Thus, researchers from the University of Newcastle introduced a botnet management mechanism to send messages to bots in the Bitcoin network.
It is not ruled out that little by little the bots will push people away from the Bitcoin Minga, as happened in the case of the Mirai Internet botnet. In April 2017, IBM specialists found that Mirai actively installs the Bitcoin mining code on the computers of some of its victims. So, the 'botatization' of mining is not yet an obvious but tangible prospect.
a source: https://cryptocurrency.tech/