Many people are keen to invest in bitcoin or some other cryptocurrency. But most of them are skeptical about safety. The crypto market is still relatively new, and people are worried about the safety of digital assets. Bitcoin has been in the market for quite some time now. And today, its network has earned the reputation of being resilient and powerful, which helps protect vital investor information. Bitcoin uses blockchain technology, along with several other cryptocurrencies.
If you head over to bybit learn to find out how the crypto market functions, you will find that blockchain technology is the fundamental platform for leading cryptocurrencies. And security is one of the main aspects behind its adoption.
Before we investigate whether blockchain technology is really safe or not, let’s understand how it works.
How does blockchain technology work?
Blockchain is heavily associated with cryptocurrencies such as Bitcoin, Ethereum, etc. This can be described as a platform where digital money transactions occur. It is a database for all types of crypto transactions throughout the world. However, the platform can also effectively store other types of data, which include medical records, humanitarian aids, and more.
Blockchain can essentially be described as a digital ledger, which is open to the public. It is one of the safest ways to make or record any kind of transaction. The whole transaction data gets saved as blocks and the information is also time-stamped.
How safe is blockchain technology?
If blockchain is to be described, it is like a series of blocks where you can store data. Each of the blocks comes with a unique hash number, and there is also a link connecting every block. Remember that each block is an integral part of the sequence which cannot be altered. In case of any changes, the hash sum would alter which would lead to the validity loss of the block.
This concept can be described as the foundation for blockchain, however, there are three other aspects for you to look into:
- Cryptography– All the transactions occurring in the blockchain platform get secured by this technology. Each of the blocks has a private and unique key, which gets verified with a public key. In case of any changes in the data related to the transaction, the unique key of the block basically becomes invalid. This results in the block getting discarded from the chain.
- Decentralization– The blockchain is decentralized and distributed, which makes it highly secure. You would not find a point of failure here which makes blockchain much harder to corrupt. Also, if one part of the system gets hacked, it would not affect any other part. But when talking about private blockchain, some of the benefits might get lost as they come with a single point of control and limited nodes. As a result, the users will not be able to make any kind of changes to the ledger. Many organizations use this blockchain technology as it allows companies to manufacture their own processes more effectively.
- Consensus– remember that the blockchain model operates through the consensus model. This helps in verifying the transaction and confirming its legitimacy. The consensus mostly runs on protocols like a proof stake, proof of work, etc.
The cryptographic system makes all the transactions irreversible. This means, once a block is created on the system, there is no way that it can be modified. You would only be able to add data to it. This means people will not be able to reverse any transactions that have already taken place.
Talking about the bitcoin blockchain, it is public and also very transparent. This might not sound safe, but in reality, it is. The users would stay anonymous in the process, while all the transactions taking place in the network are available publicly. This feature makes it very difficult when it comes to hacking or cheating.
Also, as it is decentralized, the bitcoin network is hugely distributed and has thousands of nodes. This helps to track all the transactions taking place in the system. This would ensure that in case anything goes wrong in the server, others are present to nullify it. We cannot say that blockchain is impossible to hack, but the task is very difficult.