The Blockchain shockwave increasingly steals column inches and eyeballs as it drives the Tsunami of financial disruption onwards and upwards in an almost unstoppable freight-liner journey. Venture Capitalists continue to salivate as their collective investments in the Blockchain space pass the $1.2bn mark. Major Finance Institutions dance their way through the latest Blockchain tango – patenting anything that moves before it’s either locked to the chain itself, like the 1920’s suffragettes, or patented by a competitor.
The Blockchain… could reduce infrastructure costs… by between $15 – $20bn per annum by 2022 ( Santander InnoVentures Report July 2015 )
With annual savings of around $20bn in infrastructural costs, it’s easy to see why there is so much traction in the exploration of this technology. The opportunities (and threats) are very significant. Every day, there are new ideas, new proofs of concept, being developed – so many that it is often hard to keep on top of all the ideas being developed. But none of these will work if the underlying technology is flawed.
So how secure is the underlying Blockchain technology ?
First of the bat, I am not a crypto-geek. Instead, I am a Blockchain entrepreneur, working on a smart ownership and distribution platform for film and video producers to protect them from theft and piracy. As a result, I want to approach the issue of security from a commercial perspective rather than trying to baffle anyone with mathematics, computer science and cryptography talk – there are many more people emminently more qualified than me in that regard – and this commercial proof comes from the first, most established, use case of Blockchain technology – Bitcoin.
Whilst itself having a varied and tarnished reputation, Bitcoin has proven it’s virtue as a bastion of defence and security since its launch in 2009. Using advanced cryptography to both protect and generate itself, the crypto-currency relies upon Decentralisation & Advanced Mathematics to keep itself secure. By validating and confirming transactions across multiple independent computers in the interconnected global network (called nodes), there is no one central point of weakness to attack. Equally, the Bitcoin prototcol uses the most advanced cryptography currently available, called SHA-256.
Now whilst this computer speak all sounds great in theory, there is no greater testament to the security of the technology than by having a bounty that anyone can go after if they can successfully hack the underlying technology. But this bounty is not advertised anywhere; it is only implied by some great analysis work undertaken in 2010, which still stands today.
In 2010, Sergio Lerner published a blog post that sought to establish that the creator of Bitcoin, the elusive Satoshi Nakamoto, owned around 1m Bitcoins
Image from Sergio Lerner’s blog post
Now, because all transactions and movements on the Bitcoin Blockchain are both permanent and transparent, all movements in any Bitcoin transactions can be seen by anyone with internet access. These alleged “Satoshi Bitcoins” have remained static since the days they were “mined” (i.e. created) around six years ago. In other words the creator of Bitcoin, itself, has left 1m Bitcoins untouched since its inception, with an approximate market value of around USD $430m at current prevailing exchange rates.
These untouched coins are a testament to the creator’s belief in the security of his own creation. They represent a significant and very tempting $430m reward for the smartest brains around the world to try and hack the bitcoin blockchain and steal them. Thus far they are untouched. Undoubtedly, people will have tried, but the Bitcoin Blockchain, as seen earlier, uses SHA-256 cryptographic algorithms.
To put this technology into perspective, credit cards, have 16 number combinations – giving a quadrillion (a billion, billion) different combinations – that’s a 1 followed by 15 zero’s. With SHA-256 the chances of anyone guessing the correct private key combination is estimated to be one in 115 quattuorvigintillions – that’s a 1 followed by 77 zero’s!
Sand at the beach. (Creative Commons licensed)
In other words, there are more private key combinations available on the Bitcoin Blockchain than there are grains of sand on every beach in the world. Indeed, it has even been estimated by one crytptographer, it would take all the super computers within the Bitcoin network, 0.65 billion years to duplicate any given private key. So if SHA-256 is considered so secure, why do we hear stories in the media of Bitcoins, and other crytocurrencies being stolen?
Now, for those of you that might be relatively new to Bitcoin, or other cryptocurrencies, in order to access your cryptocurrencies, you need to “unlock” your them with your individual “private key” – a randomly generated 52 character cryptographic address comprised of randomised letters and numbers, which is known only to you. Once unlocked, you can send your Bitcoins to any Bitcoin address you wish. So what could be simpler; target private keys.
Right now, hackers have malware scouring the internet looking for Bitcoin private keys – for naive open wallets just lying there waiting to be pilfered – and unfortunately there are plenty to be found.
So, overall, Bitcoin has proven itself as a secure, commercial use case for Blockchain technology – it is our own human frailty that actually represent Blockchain’s weakest link. Perhaps this is the real reason that Nakamoto’s identity remains highly elusive…
If you are interested in understanding more about the Blockchain, its power and its challenges, why not check out my new book Down The Rabbit Hole, a book for business & non-technical people, like you, to truly understand the Blockchain & to capitalize on its power. Its available on :