How Blockchain can Impact Cyber Security and Why You Should Care

Blockchain technology is arguably one of the most important inventions in the information age, and it extends beyond the vestiges of cryptocurrencies. It has massive potential to solve problems, particularly inefficiencies in a number of information processing systems, like legal contracts, escrow services, and supply chain traceability.

At its core, the blockchain is designed to serve as a decentralised ledger that eliminates friction and maximises efficiency in secure transactions. It is effectively immutable, thanks to the verification process that includes every single node or block ever created within the chain. Should hackers attempt to tamper with a blockchain’s data, they need to seize and change every other node as well. In other words, it is virtually impossible.

However, it’s clear that the blockchain technology is still in its infancy, especially when it comes to its role in the cyber security space. But that didn’t stop a handful of innovators from taking blockchain out for a spin.

Here are five applications of blockchain in cyber security that businesses can use today:

1. DDoS Protection

In the digital age, a Distributed Denial of Service or DDoS attack is among the most troublesome security threats that can compromise the stability of businesses. It’s the act of overloading an online service, such as a website or cloud-based software platform, with traffic to deny resources to legitimate users.

Hackers execute DDoS attacks using a botnet , which is basically a massive network of infected computers. It’s one of the oldest tricks in the book for shutting down competitors, and it still costs businesses up to $2.5 million on average according to the Worldwide DDoS and Cyber Insights Research Report by Neustar.

Aside from the monetary losses, DDoS attacks can also lead to other repercussions, such as the loss of customer trust, malware infections, data leaks, and actual hardware damage.

DDoS attacks can be fended off in a number of ways. You can set up network filters that blacklist suspect IP addresses, contact your hosting provider, and employ DDoS protection services that can absorb malicious traffic on behalf of your website.

With the power of blockchain, you can also rent the unused bandwidth of the collective community to withstand DDoS attacks and maximise your uptime.

2. Identity Theft Protection

According to the 2017 Identity Fraud Study by Javelin Strategy & Research, identity theft has cost over $107 billion over the past six years. Identity theft is a long-standing security threat that can lead to many cases of fraud. These incidences mostly pertain to government benefits, credit cards, tax reports, and employment-related documents.

Decentralized ID or DID for short is a blockchain-powered identity management platform that can put identity fraud to a grinding halt. As what you would’ve expected, it works by storing your verifiable identity and credentials in a blockchain environment.

For example, when creating an account on an online service, you’re not fully in control of your credentials. It will be stored on another server and used by anyone who has your login details. But with DID, only you can gain access to your account through your own device and the DID app. All your activities and transactions will then be recorded and logged on a distributed ledger, not only for transparency but also security.

Put simply, DID allows the transfer, processing, and verification of ID information, such as website credentials, bank accounts, passports, and driver’s licenses, via blockchain. It allows for a two-way trust mechanism that gives users complete control of their identity and, more importantly, their reputation.

3. Fraud Protection

Another way blockchain can prevent fraud is by automating the execution and verification of transactions via smart contracts. For example, a chargeback fraud occurs when a customer fraudulently claims to have never received their purchase. This particular type of fraud, which is known to rise at a rate of 20 percent per year, can be pushed to court by online retailers. But since the costs of escalating a dispute to arbitration, writing chargeback responses, and collaborating with payment processors exceed the actual value of most individual frauds, most online merchants simply let them slide despite the fact that the e-commerce industry collectively lost almost $7 billion to chargeback frauds in 2016.

The problem here lies with the seller’s dependence on central authorities and third parties, such as payment gateways and the court system. With smart contracts, however, these dependencies are shifted towards a public ledger of transactions.

Instead of waiting for enforcement from a central authority, smart contracts automatically moderate and execute transactions based on agreements recorded in an immutable blockchain. These currently transact major cryptocurrencies like Ethereum and Ripple to make execution faster and more streamlined. In other words, businesses will automatically and undisputably receive payments once the confirmation of delivery has been recorded.

While there are very few e-commerce platforms capable of processing payments with smart contracts, startups like Credits can serve as the underlying technology to accelerate this new frontier. It’s an open blockchain platform that offers autonomous smart contracts and operates with its own internal cryptocurrency.

4. Keyless Signature Infrastructure

In a distributed ledger, you don’t need to verify the authenticity of an information’s source the transparency does all the work for you. For example, in an instance of a chargeback fraud , GuardTime, a data security startup, explored the implementation of blockchain to key-based authentication. The result is the Keyless Signature Infrastructure or KSI.

Unlike the traditional Public Key Infrastructure or PKI, KSI doesn’t need external trust authorities for the storage of certificates and revocation lists. Instead, it automates the verification and revocation of data through a hashing algorithm, which directly compares the copy with the original data stored on the blockchain. This overcomes every single known issue with PKI systems, such as the prevalence of application errors and the danger of unpatched software.

GuardTime’s KSI solution has very specific use cases for businesses, from physical supply chain management to enterprise security. For example, it helps solve the problem of last click attribution in advertising platforms, giving all advertisers credit for impressions preceding the last click served. It also helps consumers verify an ad’s source thus, protecting them from malware and other deceptive schemes.

5. Private Messaging

Finally, hackers will capitalise every single attack point presented to them even the simplest ones like your company’s online messaging service. Remember that popular messaging apps like WhatsApp, which plenty of businesses use for internal communications, have been shown to be vulnerable to hacks targeted towards encrypted messages.

Most, if not all, messaging apps also require users to surrender their personal information in exchange for an account and the right to use the software. In doing so, they have agreed to hand over their Personally Identifiable Information or PII that traces back to their identity. This essentially puts their privacy and protection of sensitive information at risk.

While still in beta, the Obsidian Secure Messenger aims to eliminate the need for the collection of PII using a decentralised network. It also implements end-to-end encryption for messages to protect against malicious middleware attacks.

Despite technology advancing at a blinding speed, cyber crime always seems to find ways to catch up. After all, technology doesn’t discriminate between hackers and legitimate companies that strive to make a positive impact. We can only hope that innovators and entities responsible for consumer information can outpace cyber criminals from this point forward with or without the blockchain.