5 Blockchain Security Issues You Need to Know About
We cannot say blockchain-based solutions are immune to cyberattacks, even if the central idea of the blockchain is inherent security. It’s always useful to know about recognized security risks and work towards their resolution.
The idea of blockchain technology and its implementation strategy implies trustworthy transactions today. It has revolutionized the tenets of the field of finance through better access to information, lack of intermediaries, decentralization, and the principle of consensus. Therefore, blockchain security takes up importance for all firms wishing to utilize the technology in their products and services, be it an amateur or an experienced startup.
Differences in blockchain security arise from the type of blockchain as well - public and private, depending on the required access and privilege. Public blockchains are open to any participant and ensure anonymity in transactions, using internet-connected computers and consensus for validating transactions. Private blockchains only allow familiar organizations and depend on the identity and access privileges of the user. With this distinction clarified, we can gain a better insight into potential security loopholes.
5 Blockchain Security Issues That Require Attention
There’s no denying the occurrence of security issues in blockchain-based technologies, even if the central idea of the blockchain is inherent security. Since a lot of businesses require the harnessing of this technology for their operations, it’s always useful to know about recognized security risks and work towards their resolution.1. Endpoint vulnerabilities
Blockchain technology can be impacted by endpoint vulnerabilities. This means that customers who invest or conduct transactions with cryptocurrency often store a significant amount in a virtual account for later use without considering the security of these accounts. Hackers cannot target the blocks in themselves but they will target these online wallets that operate without proper security measures. One must also be aware of third-party vendors that allow transactions using blockchain technology including payment processing, blockchain platforms, and smart contracts. Lack of end-to-end security optimization in these websites and/or applications can lead to hidden vulnerabilities that can be easily exploited by keen hackers.
2. Routing attacks
Every second, there’s a massive volume of data being transferred through blockchain-powered applications and networks. Routing attacks usually involve hackers intervening in the midst of these data transfers to internet service providers under the cloak of anonymity. Due to anonymity, it’s not easy to detect such kinds of attacks as no signs are clearly visible. These attacks are often targeted at data leaks for manipulating sensitive information and using this for generating revenue on a long-term basis, without alerting the network participants. This means that long-term damage is possible from such attacks before they are detected and resolved.
3. Phishing attacks
Phishing is a common issue with all online platforms dealing with sensitive customer information. It involves a scam that distracts the user with external redirects or false offers and steals their credentials for misusing their personal information and accounts. Another way of baiting users would be through spam emails designed to look as authentic as possible to wallet users through which they ask for the user credentials. Once this is successful, hackers initiate multiple attacks using the information of the users and the blockchain network and organize larger attacks to compromise others on a larger scale. The success rate of phishing attacks has been growing in recent times and requires concrete measures for resolution.
4. Transaction privacy
Blockchain networks offer a significant amount of information regarding user behaviour which is usually protected using a private key for every transaction. Adequate transaction privacy will ensure that hackers are not able to leak data about the number of users involved in any number of cryptocurrency transactions. Experts indicate that at least 66% of transactions taken as a sample don’t have chaff coins or mixins which are tools used to remove any hidden connection between the coins used for transactions. Therefore, blockchain privacy technology needs to develop further to achieve the required level of protection of users and their transaction details.
5. 51% attacks
Blockchains compromised by these attacks can give over control of the computing power to hackers which leads to consequent control over the hash rate of the blockchain. This could provide precedence for a number of serious issues such as reversal of transactions and unknowingly double-spending by the customer. Cryptocurrency platforms such as Ethereum Classic and ZenCash have fallen victim to these attacks and total revenue losses in recent times have touched approximately USD 20 million.
For preparing against 51% attacks, there are certain measures that need to be implemented such as increased monitoring of mining pools, zero usage of proof-of-work (POW) mechanisms used for consensus, and generally ensuring a higher hash rate. Functional testing, performance testing, API security, integration testing, and other core testing services are all part of a successful blockchain penetration test.
There are different and complicated security issues within blockchain technology that need to be addressed for continued trust, efficiency, and anonymity in transactions. By being aware of the possible vulnerabilities, it’s easier to prepare a security strategy that addresses these issues for the creation of better networks. For this, firms must constantly be aware of the different issues within the industry, both in the past and the present, so as to strengthen their security barriers.
Kanishk Tagade is a B2B Marketer and corporate contributor at many technology magazines and security awareness platforms. Editor-in-Chief at "QuickCyber.news", his work is published in more than 50+ news platforms. He is also a social micro-influencer for the latest cybersecurity defense mechanisms, Digital Transformation, Machine Learning, AI and IoT products.