How is Blockchain So Secure and What Problems Does That Solve?
ATLANTA, GA — CapRE has organized multiple panels about blockchain technology but the discussion at CapRE’s Greater Atlanta Data Center Summit last month surrounding the topic may just take the cake for most riveting. The panel, Blockchain, Cryptocurrency and Bitcoin: What are They and How Do They Impact Data Center Design, Construction & Development? included a discussion about how and why blockchain (and blockchain-based currency) is so secure.
Moderator, Jeff Hill, Enterprise Data Center Services | Business Development Manager, CyrusOne: Not being a Bitcoin or Blockchain guru per sé, one of the most fascinating things to me that I’ve learned is that blockchain solves the double spend problem. Which means once you’ve got security and you’ve got anonymity, and your ledger is difficult to hack, blockchain allows you to say that this piece of value can’t be spent twice.
And to do that digitally, how do you ensure that no one else has a copy of this coin? Or picture, or whatever? It’s generated a lot of interest to ask, what beyond coins can we do that with? Some people don’t think we can and others think we can. But it helps us solve that problem.
Nathan Porter, Partner, Cryptos Managed: I think that’s a really good point….the double spend being that, an MP3 can easily be duplicated, right? Napster allows people to stream music and people can do that same thing with any digital cash. People are used to using their Visa, MasterCard or American Express, and they think that that’s digital money, but it’s not. It’s fiat currency that’s being moved. What bitcoin actually does is it creates a point on the ledger that allows the removal of the third-party to verify that those transactions took place. The main concern though with it is hackability. So how is it that they can actually secure the blockchain? Maybe we could go into a little more detail. How do we actually secure the blockchain?
Allan Williamson, Principal, At Home Crypto LLC: You have two forms of blockchain – centralized and de-centralized. De-centralized is a secure form of blockchain where supercomputers or a Bitminer like this all communicate within a certain protocol – we’ll call it a VPN – amongst each other, and they all agree every transaction. And the next transaction occurs, the next machine can see it and say no, this isn’t allowed, it’s against the protocol or against the rules. That’s de-centralized.
The ones that I see as insecure and where you are going to see hacks occur are called centralized blockchains. An example of that would be Ripple XRP, all of the blocks and the coins are made at one time by a specific company or organization. That can then be manipulated by them, because they own 51% of all of the data. And they can work the back end. With bitcoin and other de-centralized currencies – you have openness. Even if they are hacked, Ethereum is a common example of that, you just have a fork…
For more coverage of this panel, check out a previous CapRE Insider Report: Blockchain 101: Maybe Blockchain and Bitcoin Are Too Interconnected to Differentiate Them
Banner Photo (L): Nathan Porter, Partner, Cryptos Managed