Note: This is part 2 of the post “Every (possible) Blockchain Security Vulnerability and how to Deal with it”. Read part 1 here.
In the last post, we talked about public and private Blockchains and their various security risks. Here we will look at some more.
For those who didn’t have the chance to go through the first part, here’s a quick summary.
Blockchain is going to be a primary part of many multinational corporations in the coming years. (According to one research, Blockchain-enabled technologies will bring up to 6 billion in revenue by the year 2020.) And in order to ensure that your company derives substantial value, it is important that you understand the various security risks associated with Blockchain-enabled applications.
The good news is that companies can utilize Blockchain to achieve that kind of revenue.
The bad news is that these revenues can have a serious impact if Blockchain security vulnerabilities are not addressed in time.
The Blockchain vulnerabilities are divided into two sets: private security issues (related to Private Blockchain Networks) and Public security issues (related to Public Blockchain Networks.) These risks include code flaws, node communication, monopoly, and invalid transactions to mention a few.
Let’s explore some other Blockchain related security risks that make the technology vulnerable to cyber attacks and hacks.
Lack of Regulations
Blockchain technology does not conform to any regulations of standards, which is in itself a security risk.
You make think that Blockchain does not require any standards or regulations as it is decentralized and works on an anti-authoritarian model. But the truth is Blockchain technology, just like many other technologies, requires a standard set of rules. No standards or new rules for each consortium offer potential operational risks. Let me elaborate that for better understanding. Technologies that have a well-defined structure allow web developers to learn from the mistakes of previous developers and therefore improve the technology and essentially reduce the complexities. Without the standards, there is no way for Blockchain developers to learn, grow, and improve as the rules keep changing.
Endpoint vulnerabilities originate outside the technology and need to be addressed in order to ensure safety from fraudulent activities and potential hacks.
Endpoints, in a Blockchain, are the points from where humans interact with the technology.In other words; endpoints are the computers that are used by individuals to access Blockchain-enabled services. Regardless of the industry type, the Blockchain process begins with information input from one of the endpoints and ends at information outputted from another system During this process, the data is most vulnerable. Each participant on the Blockchain network uses a security key to access that data. So it all comes down to the shared access and the security key. If the credentials of the security key are exposed, it is highly likely that the data on the chain can be hacked.
This security vulnerability is more on the user end than on the technology end, but it is a security risk nonetheless and needs to be addressed to avoid potential damage.
Potential Vendor Risks
Blockchain is a distributed ledger, which means that information is constantly moved in and out of a Blockchain-enabled network. This allows for a tremendous opportunity for third-party vendors who can create Blockchain-enabled solutions. These solutions can be created for various industries including Fintech, Smart contracts, Payment processors, Payment platforms, and Wallets.
The problem with that is: the security of a 3rd-party Blockchain network depends on the trustworthiness of its vendor. Organizations that deploy 3rd-party Blockchain apps should be aware that weak security on the vendor’s side can lead to hacking or fraudulent activities. Vendor’s have to be extremely careful in making sure that the code is not flawed and all the vulnerabilities have been acknowledged before the Blockchain apps are made available to the interested companies.
The blockchain is designed to be robust and strong against the attacks. But the problem is it can only become anti-fraud if the network size continues to have a substantial network of participants. If the network is small, a Blockchain system may not be able to create anti-fragility against the potential attacks.
How to Deal with blockchain Security Risks
Here’s how you can deal with most of these security risks:
- First and foremost make sure you use an effective antivirus for your Android devices and your personal computer. Remember that when you use Blockchain you are essentially connecting through an endpoint. You need to secure your end to make sure that your sensitive information does not get compromised.
- Make sure to scan your personal computer for malware and viruses that may compromise the security of your system. If you use a good antivirus or anti-malware, your computer will be protected against various viruses that may put your network’s security at risk.
- Always use an encryption application to store your Blockchain keys. Never use a text file or a word file to store your key information.
- Never share your Blockchain key information to anybody through online means such as email. If you must share your key with anyone in your network, use Blockchain Wallet.
- When choosing a vendor-related application or service for Blockchain, make sure to do a thorough inspection of the program. Carefully vet each vendor that you want to consider before making your decision. Here, experience and reputation are two key factors to consider.
- Be extra careful before using smart contracts. Make sure you understand the use and implementation of smart contracts before getting into a deal with a third-party vendor.
- Code testing issues can cause a disaster like DAO. Therefore, it is important that you get the code tested properly and have it peer-reviewed before its deployment. In terms of smart contracts, make sure that they have been reviewed and tested by independent testing centers.
Conclusion: No technology is protected from inevitable hacks. And although Blockchain is designed to be robust and anti-fraud, it can still become vulnerable to certain risks that are beyond the control of blockchain developers. But just like any other technology, Blockchain applications can be made secure by keeping in mind the simple things that ensure safety against security hacks.
Here is a quick summary of the Blockchain security risks.
Do you think we missed any risk? Let us know in the comment section.
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