In the first image, if the central node is compromised, the whole system breaks down. But in decentralised and distributed systems, these kinds of attacks are impossible as at any given point in time, there are multiple copies of information throughout the network.

CONFUSED?

Well, the below example will clarify this concept.

Suppose Alice is transferring $100 to Bob via a traditional bank transfer. They both have an account in the same bank. When Alice initiates the transaction, the bank has a central database which deducts $100 from Alice’s account and adds $100 to Bob’s account. Now, this isn’t an ideal scenario because banks usually charge transaction fees

If something happens to the bank’s central database and that transaction is lost, neither Alice nor Bob get the $100. There are backups and safeguards in traditional banks to help prevent this, but this is still a very valid scenario. In case of a cyber-attack, all our funds in centralised servers are at tremendous risk. We as account holders, acknowledge and accept this risk because of the trust we have in these banking institutions.

Now, what if I told you, blockchain prevents all of this by creating a decentralised value exchange system with 100% uptime and a distributed trust system which is extremely difficult and highly improbable to crack.

In a distributed ledger system, once Alice initiates a transaction, all the nodes in the network confirm the transaction and the ledger is written in stone. It is immutable, and the transaction is secured. Even if an attacker tries to compromise one node, the transaction is still present in another node and to modify the transaction only in one node is still extremely difficult.

To change the details of one transaction, the attacker must modify all the following transactions in hopes of generating an alternate chain faster than the honest chain which is being processed by miners. Miners are facilitators of the transactions in the blockchain. They verify each transaction that comes across to their respective nodes by solving computationally difficult and processor intensive puzzles. The attackers’ transactions will not go through as honest nodes will reject transactions and blocks that are invalid. The attacker needs ample processing power to overcome the cumulative processing power of honest nodes which is highly improbable to achieve in well-established blockchain systems.

We will discuss more on Mining along with Public Keys and Private Keys (your crypto username and password) in future posts.