What Makes the Blockchain So Secure
In the past, chain smiths forged links from iron bars and joined them inseparably to create massively heavy anchor chains capable of defying even hurricanes. The Bitcoin Blockchain is in principle just like one of these massive forged anchor chains. But it is not the work of a single chain smith.
In the case of the Blockchain, every link, or block, passes through the hands of countless chain smiths. They check to ensure that every block is free from errors before it becomes part of the chain. Once a block is attached to the Blockchain, it becomes impossible to replace it – or any of the preceding blocks. The Blockchain smiths are known as nodes and miners.
At the same time the Blockchain is like a public cash ledger that anyone can view. Immutably recorded in every block in the Blockchain are transactions conducted using bitcoins. From the first block onwards, the Blockchain contains all the transactions ever conducted. The blocks are permanently joined together and the transactions cannot be altered. The manner in which the blocks are algorithmically linked together is defined in the Bitcoin rulebook, the Bitcoin Protocol.
A Hash Is Like a Fingerprint
An unambiguous code is generated to identify each block. This code is referred to as a “hash”. Each block in the Blockchain is identified by a hash which is created using a special calculation rule – the cryptographic hash algorithm SHA-256.
The hash is a random sequence of 64 letters and numbers which offer no clue to the content of the block. If just one character in a block is changed, its hash changes completely. The hash identifies the block as unambiguously as a human fingerprint.
If a new block containing verified transactions is attached to the Blockchain, the hash of the preceding block is also embedded in this new block. It appears in the block header. The hash for the new block is then calculated. In this way every block includes a reference to its predecessor, or parent, block.
The Blockchain grows like a mighty anchor chain, stretching back to the first block in the Blockchain, the “Genesis block”. As a result, the transactions in each block are unalterable, and the blocks are joined like links in a chain.
Needle In a Haystack
The Bitcoin Protocol specifies that a valid hash must commence with a specific number of zeros. The same block will, however, always have the same hash, which is why every block also includes a sequential number.
This number changes after each invalid hash, in order to change the block slightly and generate a new hash. This continues until by trial and error a hash is found which meets the criteria laid down by the Protocol. The miners in the Bitcoin system create billions of billions of hashes each day in the search for one that is compliant. It is like searching for a needle in a haystack.
This Makes Blockchain So Secure
The search for a valid hash requires a vast amount of computing power and is very energy-intensive for the miners. Miners undertake this work, however, because the system rewards them with bitcoins (BTC).
At the same time, the huge consumption of energy also provides security for the Bitcoin system. This is due to the fact that if even one transaction in a hashed block were to be invalid, the block would not be recognized by any other miners. And the computing power would have been invested in vain.
Likewise, the cost of changing one block in the Blockchain would be huge, given the fact that all the hashes after the amended block would have to be recalculated. This would theoretically require the computing power of at least 51 percent of the network.
A single miner could not possibly manage this. So while it may theoretically be possible to manipulate the Blockchain, in practice it would not be viable.
This is the essential security feature of Bitcoin: The security that the transactions listed in a block cannot be reversed. The Bitcoin Blockchain makes a central agency such as a bank, for example, superfluous, because it is operated by the network for the network on the basis of the unbreakable structure of the Blockchain.
In comparison with the financial and payment systems we are familiar with, Bitcoin for the first time represents a system that functions independently of any central authority. At present, the scope of its potential can only be guessed at.
Antonopoulos, A. M. (2017). Mastering Bitcoin: Programming the Open Blockchain (2nd ed.). Sebastopol: O’Reilly Media.
Lopp, J. (2016). Bitcoin’s Security Model: A Deep Dive. Retrieved March 24, 2019, from https://www.coindesk.com/bitcoins-security-model-deep-dive.
Dash Project 2017-2019. (2019). Dash Developer Guide: Find detailed information about the Dash protocol and related specifications. Retrieved March 24, 2019, from https://dash-docs.github.io/en/developer-guide#block-chain.
Narayanan, A., Bonneau, J., Felten, E., Miller, A., & Goldfeder, S. (2016). Bitcoin and Cryptocurrency Technologies: A Comprehensive Introduction. Princeton, New Jersey: Princeton University Press.