Blockchain and Cybersecurity: Understanding Its Functionality

By Ubong Philip
19 Min Read

Since the inception of blockchain in 2008, various cryptocurrencies like Ethereum, Altcoin, Binance, etc., have emerged with their public and private keywords (accessibility). Blockchain technology is a cryptographic-based distributed ledger or a decentralized distributed ledger technology (DDLT) that enables transactions among participants in the cryptocurrency network. It’s often associated with crypto transactions because it’s a more secure method of sending protected, secure transactions. 

Blockchain has become more popular due to allowing users to put their digital assets or transactions into the technology (DDLT). This has prevented any type of data breaches, theft of identity, and cyber-attacks in transactions. Moreover, it makes the data secure and private. While cybersecurity is the technology that protects your systems, networks, apps, and any programs from digital attacks like ransomware, malware etc. it’s very important for businesses and individuals.

Blockchain and cybersecurity are two (2) interconnected technologies that work together to enhance data security, enable easy transactions and protect against cyber threats.

Since blockchain is a decentralized distributed ledger technology, cyber-criminals or hackers are increasing the frequency and sophisticating cyber-attacks by leveraging new technologies using artificial intelligence (AI) and machine learning to help them perpetuate cybercrime more efficiently, causing more havoc and widespread damage.

In this article, we will be discussing more on how blockchain and cybersecurity can work together to give individuals easy and secure transactions, and free from cybercrime.

Understanding Blockchain

Blockchain is a distributed ledger technology (DLT) that is shared among computer network nodes and facilitates the process of recording transactions and tracking assets in a business network. When you are talking about blockchain, you are talking about cryptocurrency systems, for maintaining a secure and decentralized record of transactions but not limited to cryptocurrency uses. They can be used to make data in any industry with immutability.

 How Does  Blockchain Work?

Blockchain is a combination of three (3) important concepts,  which are: spreadsheet (or script), blocks and hash. However, there are several steps on how blockchain works, and they are as follows:

  1. An authorized user will make a transaction which must be authenticated by the technology
  2. Then it will create a block that represents the specific transaction or data.
  3. The block will be sent to all computer nodes in the network.
  4. The authorized nodes will validate the transactions and add the block to the existing blockchain.
  5. The update is distributed across the network, which finalizes the transaction.

Blockchain consists of a program called “SCRIPT (or spreadsheet)” which conducts tasks in a database by accessing information, saving and storing it. It is distributed, which means that lots of copies that are saved on many machines must be valid. Blockchain will collect transaction information and enter it into a ‘BLOCK’. 

Once it’s full, this whole information will go through an encrypted algorithm called HASH( created as an alphanumeric string). This hash is then entered into the following block header and encrypted with other information in the block, which creates a series of blocks that are chained together. 

Before a new block can be chained together, its authenticity must be verified by a validator or miner. At this point in the blockchain process, most of the nodes in the network must agree to the new block’s hash, which must be calculated correctly. These validators will make sure that all the copies of the blockchain distributed ledger (DLT) are shared in the same state. But if the validator is not possible, then other computers in the network will be aware of the problem being shared and there will be no new blocks to be added to the chain until the problem is resolved.

“By removing much of the human element from data, storage, blockchain significantly mitigate the risk of human error, which is the largest cause of data breaches”- By Alex Momot

We recommend reading this article to learn about block confirmation breakdown details which play a major role on blockchain technology: A comprehensive guide to blockchain confirmation

Benefits Of Blockchain Technology

Blockchain technology increases trust, transparency, security and data shared across the business network and delivers cost savings with new efficiency. There are several benefits in blockchain but I will mention at least six (6) important benefits, and they are as follows:


Its data are very sensitive and it can significantly change how their information is viewed. It helps to prevent fraud/scammers and hackers by creating a record that can never be altered and encrypted end-to-end. The information is stored across a network of computers rather than a single server, making it difficult for scammers to view your data.

Cost Reduction

In a traditional financial system like a bank, when you want to verify your transactions, you will have to pay for it, due to government regulation. But in blockchain, it eliminates the need for third-party verification and costs, just like Bitcoin which has limited transaction fees and no third-party verification.


Since it uses a distributed ledger, data, and transactions, are recorded identically in various locations. This means that there is no authority on who controls the code or how it’s edited. All transactions are being recorded, stamped and immutability. These allow members to view the entire history of their transactions and eliminate any forms of cyber-criminals immediately.

Private Transaction

It operates as a public database which means anyone having access to the internet can view a list of the network’s transaction history. However, users can also access transaction details but cannot access identifying information about the users making those transactions. There is a common misperception, that blockchain networks like Bitcoin are fully anonymous, meaning, they are unidentified due to the viewing address that can be associated with users, if in case the information goes out.


It does not store any information in a central location but rather it is copied and spread across the computer networks. Such as, when a new block is added to the system block, all the computer networks will update their blockchain to reflect the change, making it more difficult to tamper with.

Increased Efficiency And Speed

Transactions can be completed faster and very efficiently by streamlining the process with blockchain. Every document is being stored on the blockchain technology along with all the details of transactions, which eliminates the need to exchange paper like the way traditional banking does.

Understanding Cybersecurity

Cybersecurity is a process that is designed to protect networks and devices from external threats. Or it is the body of technologies, processes, and practices designed to protect networks, devices, programs and data from cyber attack, theft, damage and unauthorized access. Cybersecurity is also known as system security

Many industries or corporations are using this technology to protect their confidential information, maintain the productivity of their employees and enhance their customer confidence in products or services.

But Why Cybersecurity?

It is necessary to have cybersecurity installed in your computer system due to governments, corporate organizations, medical, military, banking and every other industry, store their remarkable amount of data on their computer and others, such as personal information, and this information are private and exposed which could have negative consequences like cyber-attacks, etc.

Types Of Cybersecurity Threats

There is a long list of cybersecurity threats that I.T. professionals have discovered over the years but till now, the list of cybersecurity threats keeps growing. But we will mention just a few common cybersecurity threats available to deal with and they are:


This is where victims are hit with a worm-like virus that can render their devices useless. It causes harm when you open the wrong attachment or click on the wrong link.


They are just like malware but the only difference is that they infect a network or steal confidential data and demand ransom (usually money) in exchange for access to your system.


This is where hackers send a legitimate-looking email and ask the users to disclose their personal information. When you open their email, they will steal your sensitive information like passwords, credit card numbers and lots more.

Denial Of Services (DOS)

This is where the hackers will consume all of a server’s resources so that there is nothing for the legitimate users to access it. In other words, it involves overwhelming a digital system with numerous requests that will cause it to crash or become unavailable.

If you want to know more about the security threat, read this article on top 10 blockchain security threats to watch out

Types Of Cybersecurity

There are several types of blockchain and cybersecurity but I will only mention a few types, and they are:

Critical Infrastructure Security

This protects the computer systems, applications, networks, digital assets and data that a society depends on for national security, economic, public safety, health and so on.

Network Security

This prevents unauthorized access to network resources, and detects and stops cyber-attacks and network security breaches in progress. At the same time, it allows authorized users to securely access the network resources they need, whenever they need it.

End Point Security

It protects devices like laptops, desktops, mobile devices and other technology including their users against cyber-attacks and also protects the network against adversaries who leverage endpoint to launch attacks.

Application Security

This is the process of enhancing mobile security and web applications. It typically occurs during development to ensure that the applications are safe and protected when deployed, which is very crucial as cyber-attackers are increasingly targeting attacks against applications.

Importance Of Cybersecurity In Today’s Digital World

In this case study, we will mention the reason why cybersecurity is important in today’s digital world:

  1. It cannot be overstated. With the advancement of technology and organizations that are more interconnected than ever before, making it vulnerable to cyber-attacks. Blockchain and cybersecurity will ensure the protection of sensitive information like your personal data, financial data etc., from falling into the cyber-attackers.
  2. The consequences will be severe if cybersecurity is ignored or neglected. For instance, most companies will lose their assets if cybersecurity is not installed into their system or network, and this could lead them to face legal liabilities and regulatory fines.
  3. Since cyber-attackers are increasingly devising new techniques to exploit vulnerabilities in systems, applications, networks, and other devices without adequate protection, then lots of these technologies, and companies will be exposed to risks like data breaches, identity theft, financial fraud and potential damage to their reputation.
  4. It’s not supposed to be an option but a necessity in today’s digital world. Companies, businesses, and technologies including individuals prioritize the protection of their digital assets and take proactive measures to secure and safeguard against cyber-attacks.

In today’s digital age, cybersecurity is more important than ever. With the increasing reliance on technology and interconnectedness of our systems, it is crucial to protect our personal and sensitive information from cyber-threats – Samuel Norris

Challenges And Limitation Of Blockchain And Cybersecurity

Implementing blockchain and cybersecurity can be challenging, and we will be dealing with it right away.

Challenges of Blockchain And Cybersecurity


This can be stressful when implementing blockchain and cybersecurity, due to the size of the block, time to respond and the number of transactions processed in seconds. And so, you will have to keep on checking the scalability of the blockchain platform as the basis for your solution.

Lack Of Governance

Since blockchain is decentralized, it lacks government regulation in the technology network, ensuring it is an easier target for fraud or cyber-crime activities. Also, it prevents other parties from deleting data, then the blockchain risks violating the government rules.

Data Privacy

This is a heavy concern for businesses, companies and technologies that want to closely control and monitor their publicly available information because, in blockchain, anyone can view it and retrieve your data in the transaction. 

Difficult To Adapt

This technology that is applied to businesses and companies, might face difficulties integrating it. And to integrate blockchain technology, especially in blockchain and cybersecurity will require a complete replacement of the current system, which will cause companies to have difficulties adapting and implementing it.

Limitation of Blockchain In Cybersecurity

Smart Contract Vulnerabilities

Smart contracts are self-executing code and any kind of vulnerabilities in the design will result in severe security breaches.

Sybil Attacks

It creates multiple fake identities to gain control over a network or voting right process, which can compromise the integrity of blockchain technology.

Shortage Skilled Expertise

The technology still requires new skilled expertise into their system, as the technology is evolving, a development community requires some time to conduct relevant training and alleviate market demand. This can be a heavy challenge and might take time to conduct training before employing more skilled experts.

High Energy Consumption

Due to the use of a proof-of-work agreement procedure for validating transactions, it utilizes excessive computer power compared to the electricity consumption of a particular country yearly. This is a concern for businesses, technology and companies if the proof-of-work will be the only option and they will have to pay energy costs.

You can also read this article that talks more about blockchain challenges with cybersecurity and developers

Twitter on tackling challenges with blockchain and cybersecurity

Potential Solution To Overcome These Challenges And Limitations Of Blockchain And Cybersecurity

For Auditing Smart Contracts

Before deployment, you have to implement rigorous auditing, and testing to identify and rectify their vulnerabilities.

For Sybil Attacks

Implement the techniques to detect and prevent the attack including having a reputation-based system and proof-of-stake mechanism

For Scalability Solution

This is to give a limited scalability increase or introduce new security concerns. However, for a better and more secure scalability solution, there must be 2 or more scalability combined.

For High Energy Consumption

This is to eliminate the proof-of-work validation. To validate blockchain transactions, proof of authority must be required, meaning the select group of individuals can only validate the blockchain transactions. If developers are to implement less energy-intensive verification method, then there should be a reduction in blockchain energy consumption

Solution To Lack Of Governance

This solution could be a private blockchain. Business or organization that uses private blockchain technology applications and their counsel should then look at a blockchain application chosen network governance model, consensus mechanism and resulting risk. This can be taken care of when designed and integrated by the solution design and architect.


Blockchain and cybersecurity are technologies that work together to enhance data security and protect against cyber threats. The decentralized nature of blockchain ensures the integrity and immutability of data, while cybersecurity measures safeguard the blockchain network from unauthorized access and cyber-attacks. The integration of these technologies is crucial in establishing trust, transparency, and resilience in various industries, like finance, healthcare, etc. The collaboration between blockchain and cybersecurity is crucial for ensuring secure and reliable digital transactions and mitigating the risks associated with cyber threats.