The word “hack” is very ambiguous in a blockchain context: is anyone trying to control the blockchain network, or just the network itself? A hacker trying to read or reverse a transaction hidden in the blockchains network, or is someone trying to control it?
Most people think of data breaches when they share private information with the public, but blockchain also raises issues related to hacking. Nevertheless, some hackers have tried to manipulate blockchains due to problems in their structure, and they have succeeded. However, the nature of the blockchain makes this kind of hacking more difficult and also causes problems with the network itself.
Blockchain feeds transactions into a public database that can be verified by anyone, which is useful in the context of blockchains because it makes them safer, since everyone must agree before making changes, although combing through this data can create a new problem; this can be solved with AI technology. Hacking a blockchain is not the same as hacking Amazon, as the blockchain was already public.
Lack of privacy is also a major concern for privacy reasons, but the benefits of blockchains can be maximised by protecting them from hackers and enabling privacy. Blockchain is a set of rules, and the community that creates and encodes the technology platform is seen as one of the benefits.
This includes decision-making and technical rules, as well as the security of the network and the privacy of its users.
Blockchain is also indirectly affected by third-party rules that exist within the blockchain infrastructure (i.e., the ability of third parties to function within it).
For example, the GDPR gives individuals the right to be forgotten, which may contradict the fact that blockchains do not allow such changes. These rules are not automatically implemented and require a third – enforcement by supervisors. The law is just one of several rules that affect the blockchain. Security and encryption are also examples of infrastructure management, but they are not the only ones.
An application can be used to authenticate transactions without requiring the sender and recipient to provide personal information. Encryption and similar rules allow people to connect to the blockchain network, but make it vulnerable when encryption is poor. If parties cannot protect their privacy, their use is limited and their structure is limited to being used differently by different developers.
This partially limits the usefulness of blockchains, but may be necessary until better solutions are developed. Sensitive transactions are excluded from the blockchain, as are sensitive information such as credit card numbers and bank account numbers.
Blockchains can be encrypted with a public or private key, and the public key is the address of the user on the blockchain. The public keys are the addresses of all users of a blockchain, while the private keys address only a subset of users.
The private key is the password that allows access to the transactions, and the problem with public and private keys is that you cannot retrieve certain information if you lose the private decryption key. One way to deal with this is to protect your privateKey by printing it out on a paper wallet.
Protecting blockchain protocols from hackers necessarily requires another layer of governance, including with encryption technology. This technology must investigate vulnerabilities in the blockchain protocol and then use the most effective data encryption tool.