6 ways companies can secure their own blockchain

6 ways companies can secure their own blockchain

There has been a significant growth in organizations deploying private blockchain technology. But despite its reputation, it is necessary not to assume that the blockchain is secure simply because it is based on cryptography. Appropriate security design with controls that address acceptable risks to the organization must be implemented and reviewed before deploying the blockchain in a production environment.

I had various conversations with people at conferences and events about this technology, and many immediately started discussing Bitcoin or Ethereum, but these are not private blockchains – they are public blockchains. I have noticed that not many people know that cryptocurrencies are just one application of blockchain technology. It is essential to know the difference between the two.

Public blockchain is not allowed and anyone can join the network and participate in the blockchain. Most of the cryptocurrencies you hear about in the news or read about on social media are public blockchains that are open to others to read and write within. Additionally, transactions completed on the public blockchain are usually immutable and available for others to see.

The private blockchain is based on permission and uses access controls configured to restrict who can participate in the network. Only network members know about other participants.

With a private blockchain, any organization can implement the blockchain and control the transactions that are added to the chain. Of course, it must be a secure system, but it will still be based on the trust and accreditation of the central authority or the third party that runs it.

The growing adoption of private blockchains

Several Fortune 500 organizations are planning to deploy or have deployed a private blockchain within their network. According to Fortune Business Insights, The blockchain market is expected to grow from 7.18 billion USD in 2022 to 163.83 billion USD by 2029.

Companies have recognized that private blockchains are evolutionary and have implemented this technology in their business operations. Many of these organizations are using Hyperledger Fabric to develop their own blockchain. Hyperledger Fabric is an open source platform/framework for building a private distributed ledger operated by the Linux Foundation.

There are a number of use cases emerging for private blocks today. Many healthcare organizations are beginning to use private blockchain technology to help doctors, patients, and insurance providers securely transfer sensitive medical information using smart contracts to define sharing criteria.

In technology, supply chain software can improve the transaction processes of the supply chain by increasing the visibility and traceability of transactions using a private blockchain. Organizations with access to the ledger can view data about past transactions. This fact increases accountability and reduces the risk of counterfeit transactions.

The diamond mining company has used a special blockchain to verify the authenticity of the diamond to ensure that it is not blood diamonds or that it does not come from specific sanctioned sources.

In the future, I expect to see more banks involved in developing a blockchain consortium to speed up transaction time and verification when account holders need to transfer funds from one bank to another. It is important to note that this will not necessarily include cryptocurrency but may instead include the standard conversion of a particular country’s currency.

Private Blockchain Vulnerabilities

There are many advantages that private blockchain technology has over public ones such as faster transaction speed, ability to reverse transactions, and reduced power and energy consumption. However, it does not have an advantage when it comes to security. It is usually less secure and more vulnerable to attacks, data breaches, and tampering. As a result, it is easier for bad actors to put the entire network at risk.

Private blockchain operators must decide how to solve the problem of missing identification credentials, especially for systems that manage physical assets. Bitcoin and Ethereum offer no sanctuary to those who have lost their private keys, and if they are lost, it is almost impossible to recover them. In recent cases, investors have lost their private keys and cannot access the millions of dollars of their investment gains.

On a private blockchain, owners can decide whether and under what circumstances a verified transaction will be reversed, particularly if the transaction appears to be theft. Also, only one organization can read and write to the ledger. In many cases, they can delete a block. For this reason, private blockchains can be more vulnerable to attacks, while in a public blockchain, blocks cannot be deleted or transactions reversed by any authority.

How to secure your own Blockchain network

Here are six steps that organizations should take into consideration to secure a private blockchain solution.

  1. Use the concept of privacy by design in the early design stage. When using this approach, you will consider data management, retention, and deletion in earlier stages of the design. It will take into account regulatory requirements such as the General Data Protection Regulation (GDPR) and other data-related privacy laws. It is important to note that following this approach may affect the type of data that can be stored on the chain due to any regulatory requirements. However, the earlier you can identify this, the better, as you can be sure that you have the perfect design to roll out to production. This approach will determine which off-chain services the private blockchain will rely on and ensure that appropriate controls are in place to counter any risk. For example, if you use a third-party provider to validate data and that provider has been hacked, your blockchain will be exposed.
  2. Complete a risk assessment prior to publication. Work with relevant business units inside and outside of IT to ensure that you have identified the acceptable risks of deploying a private blockchain within the environment. Ensure that controls are in place to protect data with an acceptable level of residual risk to the company. It is essential to get input from all stakeholders.
  3. Conduct a periodic review of third-party risks for vendors and users on the blockchain. Don’t trust anyone connected to your blockchain and make sure your connection requirements are documented and reviewed periodically. This is very important in a private blockchain because there is a possibility of data being deleted or modified, and you don’t want to connect any insecure sources that could exploit this vulnerability.
  4. Have a robust key management process in place. Implementing a secure, scalable, and resilient key management process is extremely important. This will include key backup, automated/rotational key management, imposed key management requirements, and possibly the hardware needed to store them. Protecting these keys is essential to protect the data and the environment, and any unauthorized access to the keys may break the encryption. This could cause major problems if her private key was stolen by an attacker.
  5. Continue to implement production level security controls on your blockchain. For example, make sure that you implement firewall protection, two-factor authentication, file integrity monitoring, endpoint security controls, etc. on your blockchain. Don’t assume that because it’s encrypted, standard security controls are unnecessary; Since the environment is not a public blockchain, you must prevent any unauthorized modification of the data.
  6. Use a trusted cybersecurity vendor to audit and review your design and controls. This includes penetration testing, security assessments, smart contract audits, source code reviews, and blockchain infrastructure audits. A reliable organization should do this only with experienced resources. It would be best to do this before deploying a private blockchain in a production environment. This can be used periodically to identify any design gaps and prepare the infrastructure for emerging threats or automated factors.

Following these steps may increase the time before deploying a private blockchain application. However, it’s worth ensuring your data is protected while helping to prevent an organization from having to delay production deployment due to security concerns.

Implementing these protection measures may help reduce costs incurred if an organization is hacked or if partners or customers on the private blockchain lose trust in the network.

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