Blockchain is best known for being used in cryptocurrencies such as Bitcoin, but also holds important applications for online authentication. As businesses from various sectors increasingly adopt blockchain-based security tools, can technology one day replace passwords?
How Blockchain Works
Blockchain is a secure way to maintain, encrypt and exchange digital records of transactions. Its security benefits stem from its decentralized nature. This distributed ledger is accessible to participants from various nodes and cannot be modified. All users retain controls as groups. This means that one person cannot change the ledger.
How can this provide security benefits? One advantage is the ability to create a “self-seller ID” that changes the way users identify themselves online. Essentially, instead of relying on centralized institutions, you create a private ID for the user you control. You can log on to a specific website or service using your blockchain identity.
These identities utilize encryption keys rather than passwords. The private key is used to authenticate through verification using the corresponding public key. It could be further enhanced by two-factor authentication (2FA) or multifactor authentication (MFA). For example, when logging in to a bank account.
Important Benefits
It’s easy to see how this can bring important security benefits. We all know the inherent dangers of passwords, from phishing to simple user errors. For example, reuse passwords that are equally easy to do. Using blockchain-based authentication systems should be able to significantly reduce the risk of data breaches, as the decentralized nature of the technology simply removes centralized databases, a critical target for such attacks.
What benefits does this offer in the real world? There are many examples. For example, R3 Corda is a distributed ledger technology designed for financial services, allowing for the secure exchange of data and value between parties. Such technologies can be used in areas where customers (KYCs) are known in finance, allowing banks and other operators to verify someone’s identity without risking privacy.
Healthcare is used to prevent unauthorized access to medical records and to enable the secure sharing of patient data. Infosys BPM believes the healthcare blockchain technology market could exceed $215 billion by the end of 2036.
Future challenges
Like rapidly developing technologies, blockchain poses security space and challenges beyond. Let’s take a look at some.
Cost: Blockchain is expensive and can consume a large amount of energy and computing power to validate transactions. In 2023, the United Nations University discovered that if Bitcoin is a country, it consumes more energy than Pakistan.
Unfamiliar technology: Despite the growing prevalence of Bitcoin and other such, most people and organizations still have little thought into how blockchain actually works. This can slow down the adoption of technology.
Legal and regulatory issues: Digital identity is an cumbersome area in countries that hold different jurisdictions and different standards. This can make it difficult to build global traction.
Storage requirements and scalability: Blockchain requires storage. This is a challenge that could grow as technology becomes more widely used. It is important to focus on the scalability of your solution and ensure that you provide the speed you need.
Interoperability Challenges: Without international standards, it is unclear how interoperability will be achieved. It is important to be able to verify identity across a variety of devices, sectors, and even international borders.
The future of passwords
That’s not to underestimate the potential of blockchain as a security tool. Its decentralized nature and encryption and the use of private and public keys offers great advantages. Even power consumption, cost and regulatory challenges can be addressed as technology use grows.
However, no one can predict the future, but it seems very unlikely that your password will disappear anytime soon. Passwords offer important benefits that provide lasting appeal. They are simple and universal. It’s easy to reset, making it flexible. And despite the risk of hacking and violations, they remain effective just because they are right or wrong.
Protects both logon and password
Yes, they can become vulnerable. Ideally, users would choose to use multi-factor authentication and combine the password with other security measures. This could include blockchain-based methods. Securing both logons with effective MFAs such as Specops Secure Access works best in conjunction with strong password security.
As long as the password is used, organizations should ensure that the password is weak or not compromised in the active directory. Specops password policies allow you to easily enforce strong password policies, but it scans active directories for compromised or compromised cases. Currently, we are blocking more than 4 billion compromised passwords, and our list is constantly growing.
In reality, individuals and organizations continue to rely on passwords for security online. This fact, combined with the challenges surrounding adopting new technologies like blockchain, means that we cannot afford to ignore password security, at least in the near future. Are you interested in better protection for passwords and end-user logons? Please see details.
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