Blockchain is secure and revolutionary technology – Episode 5
Blockchains can do some exceptional things unheard of just a few years ago, but the solutions they offer today are often just clunky, slow and unnecessarily complex distributed versions of things that already work quite well.
Blockchains are struggling to find relevance because they are based on a historically flawed assumption — the world shouldn’t need trust. At least at this time in our technological evolution, that’s just not true. Trust is good. Economic success is directly correlated with trust. People like having someone they can hold accountable, the infamous “single throat to choke”
A blockchain also doesn’t guarantee data is correct or meaningful, only that it is reproduced faithfully and securely across nodes. Meaning, there is always a need to trust any system with access to insert data, which means trust is always necessary somewhere else in the process anyway.
However, in an increasingly insecure world, it’s always possible the calculus may change. There may come a day when security trumps convenience or performance for many use cases and blockchains come into favor, especially if they develop a track record of security while other networks are compromised all around them.
I am particularly interested in private blockchains as a bridge to wider adoption, because that will eliminate the obvious concern that many will have about storing confidential data on random nodes in random places — even if they are strongly encrypted.
Trust in cryptography
With cryptocurrencies, even if the blockchain is secure, the company that maintains your wallet might not be. Bitcoin thefts have happened routinely and are irreversible — there is no FDIC insurance for bitcoin.
The challenge posed by the ability of quantum computers to break traditional cryptography, including the algorithms used by Bitcoin today, is of course a much larger issue than Bitcoin alone, but it does pose a challenge to the claims of impenetrable security. Modern security protocols rely upon a key pair, one of which is public and the other of which is private. It is possible to derive the public key from the private key, but not the other way around.
That basic premise is broken with quantum computers, because it will soon be possible to derive the private key from the public key. When that occurs, anyone with a copy of the public key can impersonate a node and initiate a rogue “valid” transaction. Roughly 25% of all bitcoin addresses have a publicly exposed public key, which means tens of billions of dollars are at risk of being stolen the day quantum computers with sufficient speeds hit the market.
The rest of the addresses are still vulnerable when a transaction request is initiated, it takes the Bitcoin network about 10 minutes to settle each transaction, during that time the public key is exposed and if the attacker can crack the private key in that timeframe, or if the owner of that address did not transfer the entire contents of the wallet, they will have an opportunity to insert rogue transactions and seize tokens.
This potential vulnerability is of course known to the Bitcoin developers and they will undoubtably be working on quantum-safe cryptographic algorithms, but they will not be able to go back in time and retroactively fix the vulnerabilities of the past already locked in to the blockchain.
This will be a never ending arms race.