Blockchain technology enables online sharing of digital information. A blockchain acts as public ledger that everyone has access to but is not controlled by a central authority. It is a technology that empowers people and organizations to collaborate and transact in an online environment that is trusted and transparent. The blockchain technology provides many benefits, including increased transparency and traceability of transactions. However, the security and privacy issues of blockchain can outweigh its benefits. This literature-review based study explores the privacy and security challenges of blockchain technology and their solutions.
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Blockchain technology is defined as a decentralized, shared ledger of all transactions across a peer-to-peer network. Blockchain is the architecture on which the popular cryptocurrency Bitcoin runs. Blockchain and Bitcoin are not the same terms. Blockchain is the technology that secures Bitcoin. Blockchain technology has been deployed by many businesses to improve their operations and to ensure the anonymity and security of the users. The blockchain-based solutions provide recording of information in a chronological and decentralized manner (Patil, 2021). A blockchain consists of an array of blocks in which each block is connected individually and keeps several transactions. A blockchain thus is a distributed, incontrovertible data store that can be used in a broad range of applications (Yli-Huumo et al., 2016). Being an enabling technology, blockchain provides maximum benefits when integrated with technologies (such as internet of things) (Deloitte, 2022). As an enabling technology, blockchain is at the driving seat for the next IT revolution. Blockchain technology has been implemented for a variety of applications in different areas of business.
In online business transactions, security, privacy, and safety of information have become very important (Farhadi et al., 2012). Blockchain technology has revolutionized the traditional trade. Its distributed ledger secures all recorded transactions using encryption techniques (Fanning & Centers, 2016; Gad et al., 2022). Blockchain is an emerging technology that has many applications for business. Blockchain consists of a chain of blocks that register and transfer information in a safe and auditable way, open to anyone. A system built on Blockchain does not have an institution or organization as an intermediary such as a bank; the transactions occur directly peer-to-peer.
Blockchain technology can be used to manage global payment systems and digital assets since the technology enables the creation and sharing of a distributed digital account book amongst computers within a network (Dinçer & Yüksel, 2019). This account book will be accessible by all network participants but no central authority would be involved (Dinçer & Yüksel, 2019). It is possible for organizations to use Blockchain technology within their organization to watch all the transactions that occur and detect suspicious activities within their online systems.
Blockchain technology is also critical in revolutionizing IoT security and performance. Blockchain-based IoT applications have increased. The use of blockchain in these applications help verify and trace multistep transactions. Blockchain can also help secure the business transactions, reduce compliance costs, speed up data transfer processing, contract management and audit the origin of a product, and document suspicious transactions. Blockchain can use its distributed voting systems to prevent DDOS attacks against IoT devices (Techtarget.com, 2021; Karame & Capkun, 2018).
It is important to explore blockchain technology because it promotes trust between peer-to-peer networks. The blockchain technology acts as a ledger that tracks of all bitcoin transactions. However, this ledger is public, and everyone can see the details of transactions. As such, privacy concerns arise. The major issues related to modern electronic technologies are privacy, security, and trust. There are three major dimensions of concerns related to information privacy: collection, control, and awareness. Collection refers to concern about how much personal data is held by other parties and the benefits received by the individual. Control refers to individual’s concern about the possible use and modification/deletion of their data by others. Awareness refers to individual’s concern about how much he/she knows about the privacy practices of organizations collecting the data (Fortes & Rita, 2016).
The security issues of Internet have generated a strong debate revolving around security, privacy, and trust dimensions of online transactions. Privacy, security, and trust are key issues for online technologies (Gupta & Dubey, 2016). One of the major reasons for existence of banks is that they are considered a reliable and trustworthy third-party for conducting financial transactions. Without such intermediary, transactions through peer-to-peer networks would always face the issue of trust. Blockchain is a promising technology to address this trust issue.