<h2>The problem Bitcoin solves</h2>

<p>Bitcoin provides a method for tracking scarce digital assets. This was previously solved by central entities providing an authenticator role and exerting control. Bitcoin solves this problem by creating a truth source from network consensus. Besides for its payment application, this truth source can be employed in a number of different ways, such as proof of existence, identity management, and due to its limited supply perhaps as a digital gold. </p>

<p>By nature, decentral systems are inefficient: For a big entity, i.e. countries or companies, with reasonable grounds to trust their own central truth source, there are more efficient ways of accounting their monetary flows.</p>

<p>Blockchains in general are only as valuable as they are secure, so I think it will be unlikely that there will be numerous competing services based on different blockchains, rather I think that there will be few, and additional services built on top of them, in the fashion of <a href="https://bitcoin.stackexchange.com/q/5695/5406">Colored Coins</a> or sidechains.</p>

<h2>Blockchain Security Vulnerabilities</h2>

<p>As <a href="https://bitcoin.stackexchange.com/a/37851/5406">moshaholo already said</a> the only <a href="https://bitcoin.stackexchange.com/a/422/5406">known fundamental vulnerabilities</a> are double-spending and majority attacks. While these are currently reasonably unlikely in Bitcoin, other blockchain projects with less hashpower have turned to implement additional measures to protect their integrity: </p>

<ul>
<li>Alternative Mining algorithm, e.g. <a href="https://bitcoin.stackexchange.com/a/275/5406">Merged Mining</a>, Scrypt, X11, X13, X15, NIST5, <a href="https://bitcoin.stackexchange.com/q/9082/5406">POS</a>, SHA-3, multialgorithm mining</li>
<li>Alternative Difficulty adjustment algorithms, e.g. <a href="https://bitcoin.stackexchange.com/q/21730/5406">Kimoto Gravity Well</a></li>
<li>Extensive Checkpointing</li>
</ul>

<p>There may be bugs in Bitcoin Core that haven't been discovered yet, however the implementation of alternative client software is helping to uncover unexpected behaviour as the network matures.</p>

<p>Lesser problems include that <a href="https://bitcoin.stackexchange.com/q/915/5406">correct time cannot be enforced on the network</a>, <a href="https://bitcoin.stackexchange.com/a/61/5406">traceability of payments</a> can lead to <a href="https://bitcoin.stackexchange.com/q/7966/5406">reduced fungibility</a> and <a href="https://bitcoin.stackexchange.com/q/52/5406">loss of privacy</a>.</p>

<h2>Are there entry and exit security concerns?</h2>

<p>While interaction on the blockchain is secure and mostly trustless, there are challenges with</p>

<ul>
<li>wallet security</li>
<li>exchanging currency for bitcoin: counter-party risk, fraud by charge-back, scams</li>
<li>verifying authenticity of business partner's information</li>
</ul>

<h2>Identity on the network</h2>

<p>As every user can use as many addresses as they want, identity on the network can be fairly private or as public as one wants. <a href="https://bitcoin.stackexchange.com/a/442/5406">Privacy takes some effort</a>, as one can <a href="https://bitcoin.stackexchange.com/a/7450/5406">reveal common ownership of addresses</a> e.g. by using them together as inputs for a transaction, or by creating obvious change outputs.</p>

CC BY-SA 3.0
2015-06-09T09:14:42.810Z
I'm not sure, whether I am not actually missing the point of your question about entry and exit security. If you could point out whether I got your question, or specify it further, it would be appreciated.
Murch
CC BY-SA 3.0
2015-06-09T09:10:01.400Z
2015-06-09T09:30:09.190Z
2017-04-13T12:47:33.610Z
Murch
<p>Blockchain technology solves "Double-Spending" without a trusted third party <br>

Blockchain technology is vulnerable to <a href="https://en.bitcoin.it/wiki/Majority_attack" rel="nofollow">Majority Attack</a></p>

CC BY-SA 3.0
2015-06-09T04:55:54.087Z
Blockchain technology is often said to solve the [Byzantine General's Problem](https://bitcointalk.org/oldSiteFiles/byzantine.html). Blockchain technology *addresses* the problem; it does not *solve* it (look no further than a 51% attack for proof of this). It's semantics, but important nonetheless
Wizard Of Ozzie
CC BY-SA 3.0
2015-06-10T05:46:00.710Z
@WizardOfOzzie It solves a subclass of the Byzantine General's Problem. See [Satoshi's description of it here](https://www.mail-archive.com/cryptography%40metzdowd.com/msg09997.html).
Geremia
CC BY-SA 3.0
2015-06-08T14:59:57.073Z
2015-06-08T14:59:57.073Z
moshaholo
<p>I am interested in security, identity and authenticity in electronic networks. </p>

<p>What sort of security concerns could blockchain technology help with and what sort does it pose? </p>

<p>Are there entry and exit security concerns?</p>

<blockchain><security><decentralization>
What security threats does blockchain technology solve or present?
David Yates
# What security threats does blockchain technology solve or present?

(Asked by: username_0 on 2015-06-08)

I am interested in security, identity and authenticity in electronic networks.

What sort of security concerns could blockchain technology help with and what sort does it pose?

Are there entry and exit security concerns?

**Tags:** blockchain, security, decentralization


---

## 2 answers

### Answer by username_1 on 2015-06-09. Score: 2

## The problem Bitcoin solves

Bitcoin provides a method for tracking scarce digital assets. This was previously solved by central entities providing an authenticator role and exerting control. Bitcoin solves this problem by creating a truth source from network consensus. Besides for its payment application, this truth source can be employed in a number of different ways, such as proof of existence, identity management, and due to its limited supply perhaps as a digital gold.

By nature, decentral systems are inefficient: For a big entity, i.e. countries or companies, with reasonable grounds to trust their own central truth source, there are more efficient ways of accounting their monetary flows.

Blockchains in general are only as valuable as they are secure, so I think it will be unlikely that there will be numerous competing services based on different blockchains, rather I think that there will be few, and additional services built on top of them, in the fashion of [Colored Coins](https://bitcoin.stackexchange.com/q/5695/5406) or sidechains.

## Blockchain Security Vulnerabilities

As [username_2 already said](https://bitcoin.stackexchange.com/a/37851/5406) the only [known fundamental vulnerabilities](https://bitcoin.stackexchange.com/a/422/5406) are double-spending and majority attacks. While these are currently reasonably unlikely in Bitcoin, other blockchain projects with less hashpower have turned to implement additional measures to protect their integrity:

* Alternative Mining algorithm, e.g. [Merged Mining](https://bitcoin.stackexchange.com/a/275/5406), Scrypt, X11, X13, X15, NIST5, [POS](https://bitcoin.stackexchange.com/q/9082/5406), SHA-3, multialgorithm mining
* Alternative Difficulty adjustment algorithms, e.g. [Kimoto Gravity Well](https://bitcoin.stackexchange.com/q/21730/5406)
* Extensive Checkpointing

There may be bugs in Bitcoin Core that haven't been discovered yet, however the implementation of alternative client software is helping to uncover unexpected behaviour as the network matures.

Lesser problems include that [correct time cannot be enforced on the network](https://bitcoin.stackexchange.com/q/915/5406), [traceability of payments](https://bitcoin.stackexchange.com/a/61/5406) can lead to [reduced fungibility](https://bitcoin.stackexchange.com/q/7966/5406) and [loss of privacy](https://bitcoin.stackexchange.com/q/52/5406).

## Are there entry and exit security concerns?

While interaction on the blockchain is secure and mostly trustless, there are challenges with

* wallet security
* exchanging currency for bitcoin: counter-party risk, fraud by charge-back, scams
* verifying authenticity of business partner's information

## Identity on the network

As every user can use as many addresses as they want, identity on the network can be fairly private or as public as one wants. [Privacy takes some effort](https://bitcoin.stackexchange.com/a/442/5406), as one can [reveal common ownership of addresses](https://bitcoin.stackexchange.com/a/7450/5406) e.g. by using them together as inputs for a transaction, or by creating obvious change outputs.

> **Comments:**
> **username_1**: I'm not sure, whether I am not actually missing the point of your question about entry and exit security. If you could point out whether I got your question, or specify it further, it would be appreciated.  

---

### Answer by username_2 on 2015-06-08. Score: 1

Blockchain technology solves "Double-Spending" without a trusted third party   
Blockchain technology is vulnerable to [Majority Attack](https://en.bitcoin.it/wiki/Majority_attack)

> **Comments:**
> **username_3**: Blockchain technology is often said to solve the [Byzantine General's Problem](https://bitcointalk.org/oldSiteFiles/byzantine.html). Blockchain technology *addresses* the problem; it does not *solve* it (look no further than a 51% attack for proof of this). It's semantics, but important nonetheless  
> **username_4**: @WizardOfOzzie It solves a subclass of the Byzantine General's Problem. See [Satoshi's description of it here](https://www.mail-archive.com/cryptography%40metzdowd.com/msg09997.html).  

---

