Fundamentals of Blockchain Security

Introduction

The goal of blockchain is to create a fully decentralized, trustless digital ledger. This is an ambitious goal since most ledger systems in use today, such as those used to track bank balances, rely upon a centralized authority to maintain the consistency, correctness and integrity of the ledger.

Blockchain is designed to replace this trust in a centralized authority with trust in cryptographic algorithms and protocols. The blockchain is designed so that all of its “guarantees” are reliant upon the correctness and security of protocols and cryptographic algorithms, rather than any of the individuals operating the network.

Structure of the blockchain

The blockchain gets its name from its two main structural components. A blockchain is a series of “blocks” that are “chained” together. The combination of these two features creates a digital ledger with built-in integrity protections.

The blocks

The blocks of a blockchain are what provides the data storage. A block is composed of a block header containing important metadata and a body containing the actual transactions stored in the block.

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Source: Wikimedia Commons

Block 11 in the image above shows the structure of a notional block. The block header contains a previous block hash (more on this in a minute), a timestamp, a transaction root and a nonce (important for the Proof of Work consensus algorithm).

The block body is structured as a Merkle tree, which provides a number of different benefits. One of these is the fact that, due to the properties of hash functions, the root value of the tree can be used to summarize the entire tree. Anyone with a list of the transactions contained in the block can regenerate the tree, but it is computationally infeasible to find a different version of the transaction tree with the same root value. This means that (Read more...)