Blockchain, which is the backbone of cryptocurrencies, is a technology that logs every transaction that has been done across the network of computer systems in the blockchain. Blockchain has several attributes, including a decentralized structure, encryption methods, and immutability that reduces the risk of cyber-attacks and bolsters cybersecurity safety. Despite this, online trading with blockchain comes with inherent cybersecurity risks, and blockchain is still vulnerable to fraud and cyber-attacks. These risks are mainly in the form of phishing. It is imperative to consider these risks of online trading using blockchain technology.
Alt Text: Blockchain: A new weapon in cybersecurity
Blockchain mitigates the risk of cyber-attacks through its decentralized structure. This structure helps secure systems or individual devices because it is difficult for hackers to access the data. It also reduces the reliance on trusted parties to ensure that the data has not been tampered with. A centralized system with a single vulnerable point of increasingly large quantities of data could leave data exposed to a hacker.
Additionally, blockchain’s structure makes it immune to distributed denial of service attacks (DDoS) that could potentially cut off millions of internet users in the US from major websites such as Twitter, PayPal, Netflix and Spotify, as we saw during the incident on October 21, 2016. Therefore, a decentralized system generates tamper-proof data that could help prevent cyber-attacks.
Data encryption methods secure blockchain transactions. Encryption is the technical process of securing data and systems to prevent hackers from accessing unauthorized information or tampering with transactions. An encryption algorithm is used to turn plaintext into cyphertext, which is unreadable encrypted data. Asymmetric encryption systems are used in blockchain in which only the authorized holder has access to the private key to decode the plaintext. This ensures that the blockchain transaction is kept secure.
Immutability refers to data transactions that cannot be changed once they are recorded and processed on the blockchain. Blockchain technology has a ledger of transactions that prevents hackers from meddling with data. Each block of the blockchain has a hash leading back to the last block, which makes the chain that goes back to the first block. This system makes blockchain more secure and less vulnerable to attacks and fraud.
Despite blockchain’s attributes that strengthen its cybersecurity safety, the system is not foolproof. The increasing adoption of blockchain in certain countries is positively correlated with a rise in phishing sites related to cryptocurrency. Phishing is when cyber hackers aim to steal digital assets such as login information. One common phishing technique is spear phishing. This is when cyber attackers target specific people through customized messaging, intending to disclose unauthorized information. This type of phishing typically comes in an email and could include an embedded link.
Furthermore, in a recent incident, hackers stole $41 million from Binance, a platform for one of the largest cryptocurrency exchanges for online trading, by using phishing emails. This incident brought the shortcomings of blockchain’s cybersecurity to the surface. People must take proper security precautions and understand what might constitute a phishing attack to avoid this in the future.
Individuals should educate themselves about how to prevent phishing attacks. One way to do this is to install an antivirus browser on all their devices. For example, many people have an antivirus browser on their PC but not on their mobile devices. This provides a path for mobile phishing, which has become increasingly common. Mobile phishing can come in the form of texts and on social media. Also, malicious mobile apps now have the ability to snoop on people’s screens. To prevent this kind of phishing, choosing a provider with a multi-faceted authentication process for login and password is recommended. This method encourages stronger safety measures.
The Bottom Line
Blockchain is a digital platform with many attributes that aims to bolster cybersecurity and secure blockchain transactions. These characteristics include a decentralized structure, encryption methods, and immutable data. First, blockchain’s decentralized system makes it difficult for cyber attackers to hack data, which prevents cyber-attacks. Second, encryption methods make it difficult for hackers to access unauthorized data, and therefore, it prevents them from tampering with transactions. Third, blockchain’s immutability prevents hackers from meddling with a block since each block cannot be changed and leads to the preceding block.
Despite blockchain’s positive cybersecurity attributes, transactions on the blockchain can still fall victim to cyber-attacks. The primary way cyber-attacks on online trading can happen is through phishing. Phishing is when hackers lure in people to give them unauthorized information. To prevent this, people must choose secure blockchain wallets and be educated on what constitutes a phishing attack. They also should install antivirus software to prevent attacks from taking place.