Uses the blockchain to prevent data breaches

Data breaches have unfortunately become an all too common reality. The Varonis 2021 Data Risk Report indicates that most companies have poor cyber security practices and unprotected data, making them vulnerable to cyber attacks and data loss.

With a single data breach costing a company an average of $3.86 million and eroding a brand’s reputation and consumer trust, mitigating risk is no longer a luxury. But as cyberattacks become more widespread and sophisticated, simply patching up traditional cyber security measures may not be enough to ward off future data breaches.

Instead, it is important to start looking for more advanced security solutions. When it comes to innovative solutions, preventing data breaches using the blockchain may be our best hope.

Blockchain technology 101

Blockchain technology, also referred to as distributed ledger technology (DLT), is the culmination of decades of research and advances in cryptography and cybersecurity. The term “blockchain” first became popular thanks to cryptocurrency, as it is the technology behind record-keeping in the Bitcoin network.

This technology makes it extremely difficult to change or hack a system, as it allows data to be recorded and distributed, but not copied. As it provides a completely new approach to storing data securely, it can be a promising solution for data breaches in any environment with high security requirements.

Built on the idea of ​​P2P networks, a blockchain is a public, digital ledger of stored data that is shared across an entire network of computer systems. Each block contains multiple transactions, and each time a new transaction occurs, a record of that transaction is added to each network participant’s ledger.

Its robust encryption and decentralized and immutable nature could be the answer to preventing data breaches.

Improves data security via encryption

World Wide Web inventor Tim Berners-Lee has recently said that “we have lost control of our personal data.” Companies store huge amounts of personally identifiable information (PII), including usernames, passwords, payment details and even social security numbers, as the Domino’s data leak in India (among others) has made clear.

Although this data is almost always encrypted, it is never as secure as it would be in a blockchain. By leveraging the best aspects of cryptography, blockchain can finally put an end to data breaches.

How can a shared ledger be more secure than standard encryption methods?

To secure stored data, blockchain uses two different types of cryptographic algorithms: hash functions and asymmetric key algorithms. In this way, the data can only be shared with the member’s consent, and they can also specify how the recipient of their data can use the data and the time window the recipient is allowed to do so.

Hash functions

When the first transaction in a chain occurs, the blockchain’s code gives it a unique hash value. As more transactions occur, their hash values ​​are then hashed and encoded into a Merkle tree, thereby creating a block. Each block gets a unique hash with the hash of the previous block’s header and timestamp encoded.

This creates a link between the two blocks, which in turn becomes the first link in the chain. Since this link is created using unique information from each block, the two are immutably bound.

Asymmetric encryption

Asymmetric encryption, also known as public key encryption, encrypts plain text using two keys: a private key that is usually produced via a random number algorithm, and a public key. The public key is freely available and can be transferred over unsecured channels.

On the other hand, the private key is kept secret so that only the user can know it. Without it, it is almost impossible to access the data. It works like a digital signature, like real-world signatures.

In this way, blockchain gives individual consumers the ability to manage their own data and specify with whom to share it over cryptographically encoded networks.

Decentralization

A primary reason for the increase in data breaches is over-reliance on centralized servers. When consumers and app users enter their personal data, it is entered directly into the company’s database, and the user does not get much say in what happens to it afterwards.

Even if users try to limit the data the company can share with third parties, there will be loopholes to exploit. As the Facebook–Cambridge Analytica data-mining scandal showed, the results of such centralization can be disastrous. Additionally, even assuming goodwill, the company’s servers can still be hacked by cybercriminals.

In contrast, blockchains are decentralized, immutable data records. This decentralization eliminates the need for one trusted, centralized authority to verify data integrity. Instead, it allows users to share data in a trustless environment. Each member has access to their own data, a system known as zero-knowledge storage.

This also makes the network less vulnerable to hackers. Unless they take down the entire network at once, the undamaged nodes will quickly detect the intrusion.

Since decentralization reduces points of weakness, blockchains also have a much lower chance of succumbing to an IP-based DDoS attack than centralized systems using client/server architectures.

Immutability

In addition to being decentralized, blockchains are also designed to be immutable, which increases data integrity. The immutability of blockchains makes all the data stored in them almost impossible to change.

Because every single person in the network has access to a copy of the distributed ledger, any corruption that occurs in a member’s ledger will automatically cause it to be rejected by the rest of the network members. Therefore, any change or change in the block data will cause inconsistency and break the blockchain, making it invalid.

The bottom line

Although blockchain technology has been around since 2009, it has a lot of untapped potential in cybersecurity, especially when it comes to preventing data breaches.

The first-class cryptography used by blockchain protocols guarantees the security of all data stored in the ledger, making it a promising solution.

Since nodes running the blockchain must always verify the validity of any transaction before it is executed, cybercriminals are almost guaranteed to be stopped in their tracks before they gain access to private data.

Jenelle Fulton-Brown is a security architect and Internet privacy advocate based in Toronto, Canada and helps Fortune 500 companies build future-proof internal systems.