Jan 29, 2019 08:00 UTC
Jan 29, 2019 at 08:12 UTC
Blockchain Security Issues Explained
Blockchain technology is one of the most sought after technologies of today and yet we must contend with numerous blockchain security issues at every twist and turn.
Most of our tech options are fraught with several different kinds of security issues that leave us vulnerable. In this article we explain to you the basic security issues surrounding blockchain networks.
Read on to find out what they are:
Endpoint vulnerabilities refer to the security concerns that arise at the “endpoint” or the point where human beings interact with blockchain technology.
This is not a security issue that arises from the blockchain itself, but from poor encryption.
Individuals, companies and different organizations access the blockchain networks they use at a certain point and for that they must make use of secure keys, known as a public key and a private key.
Now, when they use the keys to encrypt and then unencrypt a particular set of data, hackers can pry expertly and pick up your credentials to later break into your supposedly secure blockchain system.
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Usually, the private and public keys are too long and have too many possible combinations. That is why, hackers don’t even bother trying to guess them.
Instead, they plant a malware or a similar scamming software in your devices like your wallet, phone or computer to pick up your keys when you use them.
To avoid endpoint vulnerabilities, it is essential to avoid using your keys on an unencrypted device where it can be easily picked up from.
You May Also Read: How To Secure Crypto Wallets?
Majority Attack (51% Attack)
A blockchain network is basically a distributed ledger spread across different computer servers and users, simultaneously getting updated on each of them.
Now, the fact that it is shared, makes sure that unscrupulous changes are not made to the records maintained on the system.
What happens if someone gets majority control in the network? Well, when one miner (or usually a group of miners) gain control of at least 51% of the hashrate, they can simply modify the contents of the network.
This means that they can strike the 51% attack and rewrite records or reverse transactions.
This allows them to engage in double spending, which means spending a crypto coin you have already spent, for a second time.
Vendor Security Risk
Blockchain Technology is being increasingly integrated into the systems of various vendors and merchants many of them online.
The business benefits of blockchain are numerous, many of these vendors are embracing this technology to fulfill their business needs.
Naturally, oftentimes what happens is that the systems of these vendors themselves have security flaws or bugs in them, which can put the blockchain network at risk.
This is most common with blockchain smart contracts that are set up with the internal systems of companies and organizations, and hence fall prey to security issues arising from them.
The DAO Attack: Untested Code
The DAO attack is basically a result of rolling out a code which has not been tested out very thoroughly. It was seen in the Ethereum blockchain, and resulted in the fork that gave birth to Ethereum Classic.
You May Also Read: 10 Differences Between Ethereum and Ethereum Classic
In case of the Ethereum DAO attack, the hacker took advantage of the fact that the network processed transactions quite slowly but allowed for fast token exchanges to occur between accounts.
Creating a “child DAO account”, the hacker quickly sent a lot of token transfer requests. As the account balance was not updated quickly enough, a fund of Ether worth $55,000 was transferred to the scammer’s account.
This incident goes on to show us that having untested code puts blockchain under several security risks.
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