Principle 4 Security

Summary

This script delves into the security principles of blockchain technology, emphasizing its no-single-point-of-failure design and cryptographic safeguards that ensure confidentiality, authenticity, and non-repudiation. It addresses the digital security concerns arising from the internet's vulnerabilities, such as hacking and identity theft, and highlights the significant reduction in financial sector identity thefts post the introduction of Bitcoin. The script explains the role of public key infrastructure (PKI) in establishing a secure blockchain platform, the use of advanced asymmetric cryptography, and the economic incentives for adopting PKI in transactions. It also touches on the energy efficiency of different blockchain algorithms and concludes with the increasing safety of blockchains as they grow in length.

Takeaways

• 🔒 Blockchain networks are designed with security as a foundational principle, ensuring no single point of failure and providing confidentiality, authenticity, and non-repudiation.
• 🔑 Cryptography is mandatory for participation in blockchain networks, which helps prevent reckless behavior from affecting the entire system.
• 💻 The script addresses the lack of online security due to the rise of internet-related security risks such as hacking, identity theft, fraud, and malware.
• 📉 A significant drop in financial sector identity thefts from 50% in 2008 to 5.5% in 2014 is noted, but this is offset by a rise in breaches in the medical and healthcare sector.
• 💰 The average cost of a data breach is nearly four million dollars, highlighting the high financial impact of such events.
• 🚫 The script criticizes the reliance on weak passwords and the lack of emphasis on stronger security measures by service providers and employers.
• 🔐 Public Key Infrastructure (PKI) is highlighted as a breakthrough in blockchain security, making it nearly impossible to hack a long blockchain.
• 🔑 The Bitcoin blockchain is the largest civilian deployment of PKI, emphasizing the widespread adoption of this advanced cryptographic method.
• 🔄 Asymmetric cryptography, while secure, can be cumbersome to use, and digital certificates, though they offer another solution, are not widely supported by common email services.
• 💼 The script suggests that blockchains like Bitcoin provide incentives for the wide adoption of PKI, enhancing the security of transactions and the protection of privacy.
• 🛡️ The Bitcoin blockchain operates on the SHA-256 algorithm, a standard recognized for its difficulty in solving, thus ensuring the security of the network.
• ⚖️ The script contrasts proof of work, which is based on computational effort, with proof of stake, which is criticized for potentially favoring the wealthy.

Q & A

What is the fourth principle of blockchain design mentioned in the script?

The fourth principle of blockchain design mentioned in the script is security. It incorporates safety measures with no single point of failure, providing confidentiality, authenticity, and non-repudiation to all activity.

What does non-repudiation mean in the context of blockchain?

Non-repudiation in the context of blockchain means the authenticity of records, such as digital signatures, which cannot be denied. It ensures that the identity of the sender is confirmed and the integrity of the data is maintained.

Why is cryptography mandatory for participation in a blockchain network?

Cryptography is mandatory for participation in a blockchain network because it secures the transactions and ensures the authenticity and confidentiality of the data. It prevents unauthorized access and tampering with the records.

What problem does blockchain technology aim to solve regarding online security?

Blockchain technology aims to solve the problem of lack of online security by providing a more secure way to conduct transactions and store data, addressing issues like hacking, identity theft, fraud, cyberbullying, phishing, spam, and malware.

What was the situation with financial firms and identity thefts in 2008 according to the script?

In 2008, financial firms like BNY Mellon, Countrywide, and GE Money accounted for over 50 percent of all identity thefts reported that year, highlighting the vulnerability of traditional financial systems to security breaches.

How has the financial sector's share of identity thefts changed from 2008 to 2014?

By 2014, financial sector identity thefts had fallen to 5.5 percent of the year's total, indicating a significant decrease in identity thefts within the financial sector.

What is the average cost of a data breach according to IBM?

According to IBM, the average cost of a data breach is nearly four million dollars, highlighting the high financial impact of such incidents.

What is the significance of public key infrastructure (PKI) in the context of blockchain security?

Public key infrastructure (PKI) is significant in blockchain security as it provides an advanced form of asymmetric cryptography. It requires users to have two keys, one for encryption and the other for decryption, establishing a secure platform for transactions.

Why is asymmetric cryptography considered more secure than symmetric cryptography in the context of blockchain?

Asymmetric cryptography is considered more secure because it uses two different keys for encryption and decryption, making it harder for unauthorized parties to access the data. It also eliminates the need for a secure channel to exchange keys, as in symmetric cryptography.

What is the difference between proof of work and proof of stake in terms of energy consumption and consensus mechanism?

Proof of work requires substantial computing power and thus consumes more energy to solve the block puzzle, while proof of stake relies on the wealth of the participants, where those with more tokens have a greater say in the consensus process. Proof of work is considered more egalitarian and secure, whereas proof of stake is more energy-efficient but potentially less democratic.

How does the length of a blockchain affect its security?

As a blockchain gets longer, it also gets safer. Hacking a long chain requires substantially more computing power than attacking short chains, making it increasingly difficult for attackers to alter the blockchain data.

What implications do blockchain security measures have for personal and technological security?

Blockchain security measures imply that as we rely more on digital tools and platforms, the secure design and transparency of a blockchain can help protect our transactions and data, reducing the risks associated with online security threats.

Outlines

00:00

🔒 Blockchain Security and the Advent of PKI

The first paragraph discusses the fundamental security principles of blockchain technology. It emphasizes the absence of a single point of failure and the incorporation of safety measures that ensure not only confidentiality but also authenticity and non-repudiation of all activities. The use of cryptography is mandatory for participation, and any reckless behavior affects only the individual responsible. This addresses the widespread issue of online security risks such as hacking, identity theft, and fraud. The text highlights the inadequacy of common security measures like flimsy passwords and the lack of specialized secure technology in financial institutions. It points out the significant reduction in financial sector identity thefts post the introduction of Bitcoin, but notes a rise in breaches in the medical and healthcare sector. The high costs associated with data breaches and the potential for blockchain, through the use of public key infrastructure (PKI), to provide a secure platform for transactions are also mentioned. The paragraph concludes by explaining the concept of PKI and its significance in making blockchain a breakthrough in secure digital transactions.

05:00

💼 Incentivizing Privacy with Blockchain and PKI

The second paragraph explores how blockchains, specifically Bitcoin, offer solutions to privacy and security concerns by providing incentives for the widespread adoption of PKI in transactions. It explains that the use of Bitcoin and its underlying protocols can secure the storage and exchange of not only currency but also confidential information and other digital assets. The paragraph details how digital currency operates through cryptographic hashes and transactions, with users holding their own crypto keys and being responsible for their security. The Bitcoin blockchain is highlighted as running on the SHA-256 algorithm, which is a U.S. federal information processing standard and extremely secure. The proof of work mechanism, which rewards participants with new Bitcoin for solving computational puzzles, is contrasted with proof of stake, which is criticized for potentially favoring the wealthy. The paragraph concludes by noting the increasing safety of a blockchain as it grows in length, likening it to the difficulty of turning a chicken McNugget back into a chicken, and emphasizing the broader implications of blockchain security for personal and transactional security in the digital age.

Keywords

💡Blockchain

Blockchain is a decentralized, distributed ledger that records transactions across multiple computers so that the record cannot be altered retroactively without the alteration of all subsequent blocks. It is integral to the video's theme as it underpins the security and integrity of digital transactions. The script mentions the blockchain network's incorporation of safety measures and its role in providing confidentiality, authenticity, and non-repudiation.

💡Security

Security in the context of the video refers to the measures taken to protect against threats, including hacking, identity theft, and fraud. It is a core principle of blockchain technology, which aims to provide a secure platform for digital transactions. The script discusses the lack of online security and how blockchain can address this issue by making transactions hack-proof.

💡Non-repudiation

Non-repudiation is the assurance that someone cannot deny the authenticity of a transaction or record. In the video, it is mentioned as a feature of blockchain technology, where digital signatures ensure that transactions cannot be denied, thus providing a level of trust and integrity to the network.

💡Cryptography

Cryptography is the practice and study of secure communication, which is fundamental to blockchain technology. The script emphasizes that anyone who wants to participate in the blockchain must use cryptography, which is essential for ensuring the security and confidentiality of transactions.

💡Public Key Infrastructure (PKI)

PKI is a set of roles, policies, and procedures needed to create, manage, distribute, use, store, and revoke digital certificates and manage public-key encryption. The video highlights PKI as a requirement for establishing a secure platform in blockchain, where it facilitates secure transactions through the use of asymmetric cryptography.

💡Asymmetric Cryptography

Asymmetric cryptography, also known as public-key cryptography, uses a pair of keys to encrypt and decrypt messages. The script explains that in blockchain, users get two keys, one for encryption and the other for decryption, which is a key aspect of ensuring secure transactions.

💡Data Breach

A data breach occurs when unauthorized individuals gain access to sensitive information. The video script cites the high costs and prevalence of data breaches, illustrating the need for the security measures provided by blockchain technology to protect against such incidents.

💡Proof of Work

Proof of work is a consensus algorithm used in blockchain networks, such as Bitcoin, to achieve distributed consensus. The script describes it as a process where computers solve complex puzzles to validate transactions and earn new Bitcoin, which requires significant computational power and energy.

💡Proof of Stake

Proof of stake is an alternative consensus algorithm to proof of work, where the creator of the next block is chosen based on their wealth or 'stake' in the system. The video script mentions it as an energy-efficient alternative but raises concerns about its potential to favor the wealthy.

💡Digital Signature

A digital signature is a mathematical scheme for verifying the authenticity of digital messages or documents. The script mentions digital signatures as a means of ensuring non-repudiation in blockchain transactions, where the authenticity of records cannot be denied.

💡Cryptographic Hash

A cryptographic hash is a fixed-size string of bytes derived from an input using a hash function. In the context of the video, cryptographic hashes represent digital currency transactions, ensuring the integrity and immutability of the data within the blockchain.

Highlights

The fourth principle of blockchain is security, which includes safety measures without a single point of failure.

Blockchain provides confidentiality, authenticity, and non-repudiation to all activity.

Non-repudiation means the authenticity of records, such as digital signatures, cannot be denied.

Participation in the blockchain requires the use of cryptography, with no option to opt out.

Reckless behavior on the blockchain only affects the person who behaved recklessly, not the entire network.

Blockchain addresses the lack of online security brought by the internet, such as hacking, identity theft, and fraud.

Most people rely on weak passwords for email and online accounts due to lack of stronger alternatives.

Financial firms were major contributors to identity thefts in 2008, but by 2014, the sector saw a significant drop.

The cost of a data breach is nearly four million dollars, according to IBM.

Medical identity fraud can cost individuals close to thirteen thousand five hundred dollars.

Blockchain's breakthrough is its ability to make transactions hack-proof using public key infrastructure (PKI).

Satoshi required participants to use PKI for a secure platform, which is now the largest civilian deployment of PKI.

Asymmetric cryptography, invented in the 1970s, gained traction in the 1990s for email encryption.

Digital certificates are an alternative to PKI but are not widely supported by common email services.

Blockchains like Bitcoin solve privacy and security issues by incentivizing the adoption of PKI for transactions.

Digital currency is represented by transactions indicated by a cryptographic hash.

The Bitcoin blockchain runs on SHA-256, an algorithm accepted as a U.S. federal information processing standard.

Proof of work is the process of earning new Bitcoin by solving a puzzle, which requires significant computational power.

As a blockchain gets longer, it becomes increasingly secure and difficult to hack.

Blockchain security measures have implications for personal and technological security in the digital age.

Transcripts

foreign

[Music]

design principles underlying blockchain

our fourth principle is security

the blockchain network incorporates

safety measures with no single point of

failure

they provide not only confidentiality

but authenticity and non-repudiation to

all activity

by non-repudiation we mean the

authenticity of Records like a digital

signature can't be denied anyone who

wants to participate in the blockchain

must use cryptography you can't opt out

and because of how it's set up any

Reckless Behavior doesn't endanger

everyone it only affects the person who

behaved recklessly

the problem this solves is lacks online

security you ever heard of that

the invention of the internet brought a

variety of new security risks to people

hacking

identity theft fraud cyber bullying

phishing spam malware ransomware and so

on people institutions and economic

activity have become more accessible but

less secure

most people rely on flimsy passwords to

protect their email or online accounts

because service providers and employers

don't insist on anything stronger and I

know the name of your dog

the typical bank doesn't specialize in

developing secure technology it

specializes in financial innovation

in 2008 the year Satoshi published his

white paper on bitcoin data breaches

that Financial firms like bny Mellon

Countrywide and GE Money accounted for

over 50 percent of all identity thefts

reported that year

by 2014 financial sector identity thefts

had fallen to 5.5 percent that sounds

like good news but it isn't breaches in

medical and Health Care jump to 42

percent of the years total

the average cost of a data breach is

nearly four million dollars according to

IBM

that means data breaches have cost at

least one and a half billion dollars

over the last two years alone

the average cost to an individual of

medical identity fraud is close to

thirteen thousand five hundred dollars

and offenses are on the rise

consumers don't know which aspect of

their life will be hacked next it's the

next stage of the digital Revolution

involves communicating money directly

between parties

then Communications and transactions

need to be hack proof using public key

infrastructure from the start makes a

long blockchain almost impossible to

hack

that's the blockchain's Breakthrough

Satoshi required participants to use

public key infrastructure or pki to

establish a secure platform

pki is an advanced form of asymmetric

cryptography where users get two keys

the two keys don't perform the the same

function one is for encryption and the

other is for decryption the Bitcoin

blockchain is now the largest civilian

deployment of pki in the world

only the U.S Department of Defense uses

it more widely asymmetric cryptography

was invented in the 1970s and it gained

some Traction in the 1990s in Email

encryption freeware such as pretty good

privacy or pgp pretty good privacy is

pretty secure but it's also pretty much

a hassle to use everyone in your network

needs to be using it you have to keep

track of your own two keys and you have

to keep track of everyone else's public

key

there's no password reset function if

you forget yours you have to start all

over

digital certificates are another

solution they're pieces of code

protecting messages without the encrypt

decrypt operations but users apply and

pay an annual fee for their individual

certificates again the most common email

Services don't support them so you won't

have the encryption you're paying for

when you write to someone using Gmail or

Outlook

which is a lot of people

people still lack incentives to protect

their privacy and their daily routines

blockchains like Bitcoin solve nearly

all of these problems by providing the

incentive for wide adoption of pki for

all transactions and value

not only through the use of Bitcoin but

also in the shared Bitcoin protocols

there's no need to worry about weak

firewalls thieving employees or

Insurance hackers

if you and I are both using Bitcoin we

can store and exchange Bitcoin securely

if we can do that then we can store and

exchange highly confidential information

and many other digital assets securely

as well

now here's how it works digital currency

isn't stored in a file per se

it's represented by transactions

indicated by a cryptographic hash

users hold their crypto keys to their

own money and transact directly with

each other

every user is responsible for keeping

his own private Keys private

security standards matter the Bitcoin

blockchain runs on what's called Shaw

256 a well-known and established

algorithm published by the U.S National

Institute of Standards and Technology

nist

it's accepted as a U.S federal

information processing standard it's

extremely difficult to make the many

calculations required to find a block

solution and computers have to chew

through a lot of electricity to do it

but when they do they solve the puzzle

and earn new Bitcoin and this effort is

called proof of work

other algorithms such as proof of stake

burn much less energy but some experts

find it suspect crypto expert Austin

Hill calls proof of stake a system where

the rich get richer where people who

have tokens get to decide what the

consensus is

so you could argue that proof of work on

the other hand is based on physics

instead of wealth and is therefore more

egalitarian

finally as a blockchain gets longer and

longer it also gets safer and safer

hacking a long chain requires

substantially more computing power than

attacking short chains

and a blockchain is a highly processed

thing the best analogy we've come up

with is it's like a chicken McNugget it

would be like turning a chicken McNugget

back into a chicken now someday some of

them will be able to do that but for now

that's going to be tough

so what are the implications of

blockchain security measures

these days technological security goes

hand in hand with personal security

today bits can pass through our

firewalls and wallets

these can pick our pockets or hijack our

cars from the other side of the world as

each of us relies more and more on

digital tools and platforms the threats

have multiplied

with the secure design and transparency

of a blockchain like Bitcoin we can make

transactions of value and we can protect

our data