How does blockchain technology secure transactions?

[skrimon]

Blockchain technology produces a structure of data with inherent security qualities. It's based on principles of cryptography, decentralization, and consensus, which ensure trust in transactions.

In most blockchains or distributed ledger technologies (DLT), the data is structured into blocks and each block contains a transaction or bundle of transactions. Each new block connects to all the blocks before it in a cryptographic chain in such a way that it's nearly impossible to tamper with.

All transactions within the blocks are validated and agreed upon by a consensus mechanism, ensuring that each transaction is true and correct.

Cyberattacks and fraud

While blockchain technology produces a tamper-proof ledger of transactions, blockchain networks are not immune to cyberattacks and fraud.

How security differs by blockchain types

Blockchain networks can differ in who can participate and who has access to the data. Networks are typically labeled as either public or private, which describes who is allowed to participate, and permissioned or permissionless, which describes how participants gain access to the network.

Public and private blockchains

Public blockchain networks typically allow anyone to join and for participants to remain anonymous. A public blockchain uses internet-connected computers to validate transactions and achieve consensus.

Bitcoin is probably the most well-known example of a public blockchain, and it achieves consensus through "bitcoin mining."

Computers on the bitcoin network, or “miners,” try to solve a complex cryptographic problem to create a proof of work and thereby validate the transaction. Outside of public keys, there are few identities and access controls in this type of network.

Private blockchains use identity to confirm membership and access privileges and typically only permit known organizations to join. Together, the organizations form a private, members-only "business network."

A private blockchain in a permissioned network achieves consensus through a process called "selective endorsement," where known users verify the transactions. Only members with special access and permissions can maintain the transaction ledger. This network type requires more identity and access controls.

When building a blockchain application, it’s critical to assess which type of network will best suit your business goals.

Private and permissioned networks can be tightly controlled and preferable for compliance and regulatory reasons. However, public and permissionless networks can achieve greater decentralization and distribution.

Bitcoin is the first successful implementation of blockchain. Today, the world has found applications of blockchain technology in several industries, where trust without the involvement of centralized authority is desired. So welcome to the world of Blockchain. Write some lines about blockchain.

[Mirry]

That is really interesting!

 

[telleded]

Interesting, tnx for sharing

[stock999]

On 5/15/2022 at 2:50 PM, skrimon said:

 

Private blockchains use identity to confirm membership and access privileges and typically only permit known organizations to join. Together, the organizations form a private, members-only "business network."

 

 Could you give a few examples of these 'private' blockchains?

I'm working in crypto sphere a long while, have seen many of different blockchains, different kinds of consensus, etc., but i can't imagine what exactly you have called as 'private blockchains'.
Usually any blockchain tech is against any kind of identity&restrictions by it's decentralized nature.