The blockchain was created to be completely immutable through the use of cryptographic hash functions, Rambus explains in this 13-page ebook. “Put simply, this means that once the data is put inside the blockchain it cannot be tampered with. A safe, however, isn’t secure if someone steals the combination.”
“Blockchain uses a combination of public and private keys to store and send virtual assets. In banking terms, you can think of the public key as the bank account number and the private key as the user’s PIN.”
“Anyone can have access to the public key and as long as the private key remains a secret, the assets are safe. If a private key is lost or stolen, the assets associated with it are gone with no means of recovery. Herein lies the fundamental shortfall that undermines the security of blockchain solutions — protecting private keys.”
‘The blockchain — Not as secure as you think’ begins with an overview of blockchain technology, how it is used to enable the buying, selling and ownership of cryptocurrencies and its potential use cases beyond cryptocurrencies.
It then explains the role of public and private keys, the issues surrounding the safe storage of private keys — and the reasons why cryptocurrency owners and custodians have been the victims of significant thefts of funds.
The ebook then examines the roles of hot and cold wallets and of the multi-signature approach to security and explains how the tokenization of private keys holds the potential to promote consumer and institutional confidence in both blockchain applications as a whole and in cryptocurrencies in particular.
‘The blockchain — Not as secure as you think’ has been produced and sponsored by Rambus and approved by the NFC World editorial team.
How to access this document
This 13-page document is available free of charge to NFC World Knowledge Centre members (PDF format, 4.2MB).
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This item is part of the What's New in Payments Knowledge Centre.