This past September, a cybersecurity breach at credit-reporting company Equifax compromised 143 million customers. In July, an attack exposed the records of over 14 million Verizon subscribers. Last year, hackers broke into the servers of Bangladesh Bank and made off with $100 million.
These aren’t isolated incidents. Hundreds of data breaches happen each year across industry sectors, from banking to retail to healthcare. Statistics show that it’s getting worse: the volume of cyberattacks doubled in the first half of 2017 alone, and continues to rise.
The prevalence of data breaches is no surprise, given the volume of transactions and personal data stored online. With the growth of networked commerce, cybersecurity has become a top priority for companies. But conventional cybersecurity solutions aren’t doing the job. Today, many companies are looking to blockchain technology for better data security.
What Makes Bitcoin and Blockchain So Secure?
Bitcoin, and the blockchain technology behind it, provides a highly secure platform to process and record transactions. It tracks the transfer of ownership and other sensitive data in a distributed public ledger that can be viewed by anyone, but not modified.
The blockchain ledger creates a searchable database of transactions. Records are stored across a vast network of servers that constantly verify each other. Not only does this system reduce error, it decentralizes the information across servers. Because the blockchain ledger is decentralized and encrypted, it’s more difficult to hack, and less vulnerable to breaches.
Blockchain works so well for Bitcoin because it lets users make transactions without going through a central institution, like a bank. Transactions are essentially self-verifying – there’s no need to rely on the banking system to transfer value. Each Bitcoin transaction is recorded chronologically in the blockchain and confirmed using a private key. Once made, transactions can’t be altered. A record of transactions is visible to all users in a shared public ledger.
Beyond Finance: How Blockchain is Changing Data Security
The innovative technology behind Bitcoin has applications beyond finance. Blockchain can work for any organization that has a need to track data or transactions. In the modern internet economy, that covers just about everybody.
Consider the amount of sensitive data that exists online. Healthcare organizations routinely process patient medical records and identifying information. Legal firms execute contracts, transfer property rights, and access public records to serve clients. Manufacturers, retailers, and shipping companies track orders and commerce across large and complex supply chains.
These industries expend large amounts of time and resources to process transactions. They also spend huge sums to keep that data secure. With blockchain, companies can cut costs and streamline transactions while providing a secure environment for data.
New Applications Across Industries
Bitcoin and blockchain are leading the charge across industries as innovative, effective, and secure ways to track the transfer of information. One example is APPII, a blockchain-based platform that allows human resources professionals to verify CVs and credentials to make sure that job applicants aren’t making false claims. As APPII managing director Gary McKay points out, any industry that requires value transfer between parties and the establishment of trust can benefit from blockchain solutions.
Healthcare IT and the law are actively integrating blockchain into their processes. Consulting firm IDC Health Insights predicts that by 2020, 20% of healthcare organizations will be using blockchain for record-keeping, operations, and identity verification. In the legal field, blockchain-based smart contracts can ensure that contractual conditions are met automatically, without human legal professionals. Land deeds and intellectual property rights can also be tracked using the public ledger system.
Manufacturers benefit from blockchain’s supply chain applications. Electronics manufacturer Foxconn is already using blockchain’s decentralized network to facilitate transactions at every point in the supply chain, from factory to customer. Since blockchain requires no central clearinghouse, it saves cost and time by cutting out the middleman while providing an auditable public record of transactions. The Blockchain Research Institute, which includes IBM, FedEx, and PepsiCo, is working towards advancing blockchain integration in industry.
The Blockchain Solution
As the economy becomes increasingly networked, data security becomes a growing concern for companies across a wide span of industries. Siloed data is easy to falsify. Centralized networks create vulnerable targets for hackers. Skilled cybercriminals exploit these weaknesses, resulting in millions of compromised records.
Bitcoin, and the blockchain technology that powers it, offers a solution. It decentralizes data, making it harder to hack. It creates an immutable public record that is self-verifying and cannot be faked. It also establishes trust automatically among parties so that value can be safely transferred without the need for a middleman.
As Bitcoin goes mainstream, so too does blockchain. It’s becoming an essential ingredient in data transfer, record keeping, and operations. Within a few years, we can expect to see a dramatic improvement in cybersecurity due to blockchain technology.
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