Most people who have heard at least something about blockchain have also heard that it is almost impossible to hack this technology.

However, there are many contradictory news where cryptocurrencies worth millions of dollars have been stolen.

Although blockchain has been hacked a few times, not many look into the details and read that it was actually cryptocurrency exchanges that were hacked.

The blockchain community, inspired by the illusion of security of blockchain technologies, often forgets to check its code and monitor the emergence of new threats and technologies that help deal with them.

For instance, Privacy Protocol Computing (MPC/SMPC) is a cryptographic protocol that distributes computation among multiple parties without any party being able to see the other parties’ data.

These protocols can be implemented in such a way that they will be protected from attacks using a quantum computer.

Moreover, such protocols can be secure even against attackers with unlimited computing power.

This technology is used by leading crypto exchanges, including Coinbase, Binance, Bitfinex, Kraken, and new-generation crypto platforms such as CoinDepo, which offer users a wide range of financial services for digital assets.

For example, CoinDepo not only allows customers to store crypto holdings safely, but also provides the opportunity to earn stable passive income by depositing cryptocurrency and stablecoins in Compound Interest Accounts.

With impressive APRs (Annual Percentage Rates) of up to 18% + compounding for regular crypto and up to 24% + compounding for stablecoins, it is by far the best value proposition on the market.

Tools and Features That Ensure Blockchain Security

i. Decentralized and Open-Source Protocols 

Today, blockchain has the greatest involvement of computing systems in the world. Any interested user can become a participant.

The more people use blockchain, the more reliable and secure it becomes.

To join this system, you just need to install a wallet and download a full node to disk.

From this very moment, your PC will become a full-fledged node in a huge network.

Copies of the blockchain can be installed on tens of thousands of PCs, and everyone with sufficient knowledge and necessary equipment can see them.

The technology is fully transparent, and when it comes to lending crypto, understanding this transparency becomes even more crucial.

Therefore, if some user decides to try to hack the system and draw a million in their wallet, they need not only to recalculate all the blocks themselves, but also to do this on every node (i.e., computer).

This is certainly impossible. The system has no central control.

More nodes are being added to the chain, which reduces the chances of possible hacking.

ii. Hashing Algorithm

The system is based on complex mathematical algorithms that connect blocks into a single chain.

Thanks to this algorithm, all new blocks of information are added to the end of the chain already encrypted.

The encryption process itself is called hashing.

It is performed by hundreds of thousands of computers simultaneously.

If all participants in the system accept the new block, then it is added to the chain with a new digital signature.

To connect the links of the chain together, the developers came up with the following: each new block is supplemented with the hash of the previous one.

A hash refers to encrypted transaction data.

For example, Bitcoin uses the SHA-256 algorithm to hash the operation.

Finding the sequence of the alphanumeric code of a cryptographic key is an almost impossible task.

As the memory becomes full, the block closes.

Subsequently, it moves to a new block in the form of a hash.

Thus, the registry is updated, and no one can any longer make any changes.

A new data block cannot be deleted or hidden from other system participants.

iii. 51% Attacks

In order for the network to be replenished with a new block, approval for this must come from more than half of the users.

Therefore, if there is an attacker with very powerful hardware on the network, he will be able to push fake blocks into it.

Theoretically, this is possible but rarely resorted to in practice.

This is due to:

• the high cost of this method (it is difficult to have more powerful equipment than the remaining 50% of participants combined), and
• complexity (since many blockchains are based on mechanisms to protect against hacker attacks.) The latter include Proof of Stake and Proof of Work.

Accordingly, these types of attacks are more likely on smaller networks where the cost is more affordable than on larger networks such as Bitcoin.

iv. Quantum Computing

Experts note that hackers do not have enough power since modern computers cannot hack the blockchain.

But in the next decade, a sufficiently advanced quantum computer that can break through security will appear.

Why do you need a quantum computer for hacking?

Every Bitcoin transaction, for example, must be “confirmed” by a network of miners before it is added to the blockchain, the ledger of who owns what.

Each transaction is assigned a cryptographic key during this confirmation process, and breaking it allows you to pocket the Bitcoins.

The enormous power required to perform these calculations keeps cryptocurrency wallets secure.

How big is it?

An analysis by the University of Cambridge found that so-called Bitcoin miners worldwide consume more energy than entire countries, including Argentina and the Netherlands.

While this energy-intensive process makes codebreaking nearly impossible for regular computers, quantum machines are expected to be more powerful by several orders of magnitude.

v. PoS-Based Hacks

Proof-of-Stake is a consensus mechanism that secures the blockchain network.

It ensures that only legitimate transactions are added to the blockchain.

It works through validators that lock their cryptocurrencies to protect the network.

You don’t need heavy-duty hardware since earning crypto rewards with Proof-of-Stake is not based on the most computing power.

This allows more people to participate in running the node, allowing for further decentralization and greater resistance to attacks, especially 51% attack.

To carry out a 51% attack, you must take possession of more than half of the network’s entire cryptocurrency, which is a lot of money.

The attack will become financially unreasonable even if the attackers collect such an amount.

The Future of Blockchain Security

The crypto community is trying to resist attackers.

Against the backdrop of numerous hacks, BugBounty platforms and Blockchain Security startups like Hacken.io are gaining popularity.

Such applications do not just audit code but also audit smart contracts and wallets by programmers.

Some crypto market experts believe that for these purposes, it is more reasonable to use so-called “white” hackers who will test security systems.

When it comes to blockchain security and projects built based on this technology, it is essential to take an integrated approach.

This will ensure the security of the code along with the security of the development environment.

One should also not exclude the human factor, which is the reason why many hacking attacks were made.