Is Blockchain Really Secured from Cyber Attacks?: Know the Truth

Blockchain is emerging as one of the smart technologies of the future. The assurance of providing extreme security to maintain confidentiality and secrecy of data while preserving the integrity of it is the fundamental reason behind the growth of blockchain. However, no system is fully secure from potential threats. While blockchain boasts to provide the highest grade of security for storing and managing the data, hackers are finding out the ways through which potential attacks on the blockchain can be executed successfully.

Blockchain: A Digital and Distributed Ledger

Blockchain is basically a digital ledger that is distributed among a set of authorities. Each authority is assigned a node through which they can enter and process transactions. It decentralizes the control to reduce the chances of system failure as even if one node stops working in the system, other nodes are up and running efficiently to provide results. Moreover, the implementation of the cryptography concept insists on using public and private key pair at each node to enhance the security of data and the hash ID assigned to each node indicates enhanced security.

Using the concepts of asymmetric encryption methods and cryptography practices, blockchain aims to provide the best possible way to store and manage data efficiently. Despite the requirement of highly advanced computation power and electricity needs, blockchain does get implemented in various industries to manage the confidentiality of data. But are the systems implementing blockchain really secure? Let’s find out.

Blockchain can successfully save systems from common cyber attacks. However, hackers have found their ways of feasting on the vulnerabilities of blockchain technology which requires the developers to think two steps ahead to protect the system.

Possible Security Attacks on Blockchain

Every system has its own vulnerabilities. The growth of blockchain technology has remained commendable as it has successfully attracted 2.7 billion U.S. dollars spending worldwide. However, as these vulnerabilities are explored continuously, the future guarantees a completely secure system that can prevent any attack with the best concerns put in use.

The factors that often get targeted by hackers to gain control over the blockchain system are:

• User Wallets: A blockchain-enabled crypto wallet that helps transact cryptocurrencies without storing them in the software.
• Smart Contracts: The self-executing protocols that work as an agreement between buyers and sellers over the blockchain network.
• Blockchain Network: The entire network created by chaining multiple nodes to ensure the security of the transaction data stored.
• Mining Pools: Mining pools are the set of different miners working to provide verification services for cryptocurrencies.
• Transaction Verification Operations: The operations that help verify the transaction whether it is valid or not.

1. Attacks on User Wallet

The crypto wallets pose the greatest threat from cyberattacks that can compromise the security of the system. Common cybersecurity attacks, phishing, dictionary attack and more can be tried out by hackers multiple times and also using the weak measures of the cryptography algorithms used, they can potentially harm the overall security of the user wallets.

Cold Wallets and Hot Wallets

While hot wallets are naturally the most attacked one from these two, cold wallets can also suffer from several damages if the cryptography concepts used are not well attended. As any mobile application, e.g. app like uber can contain several bugs and required fixes over time, similarly, the cold wallets or hardware wallets may encounter bugs that easily expose the hardware device to possible hacking attempts.

Moreover, hot wallets always remain connected to the internet that can increase the possibilities of successful hacking attempts to a great extent. The coin check attack was executed on the hot wallet where around $ 534 million worth loss of XEM coins, also, the biggest theft till the time was recorded.

A small mistake in preserving the encrypted key and a single miss at maintaining the security measure intact can result in such great loss, especially with blockchain and cryptocurrencies.

2. Attacks on Blockchain Networks

Blockchain networks are known for their best efforts behind enhancing the security of the entire network. However, hackers can try and get a hold on to these networks if they have enough computational power and are backed by a supercharged energy emitting station. The computations for hacking the network is surely very much resource requiring, but still, hackers have succeeded in some attempts when they directly targeted the weak note.

Attacks like distributed denial of service (DDoS), routing attack, Timejacking, Sybil attack and more can be executed over the blockchain networks to try and attempt severe damages and thefts. However, the success of the transaction malleability attack caught the attention of many, when two transactions instead of single were used to steal $500 million worth of bitcoins from MtGox, which went bankrupt due to this attack.

3. Attacks On Transaction Verification Operations

The transaction verification processes ensure the recorded transaction is valid by considering each and every node’s agreement. The time taken for verifying the transactions is the perfect gap for cyberattacks to attempt thefts and using the double-spending method, the successful attacks can be attempted. 

Including race attack, Finney attack, alternative history, Vector76 and more hackers can easily make any transactions invalid or execute theirs as valid. If you think that the computational power is a constraint stopping them, but not anymore. They can just lend it through performing several other attempts on vulnerable systems to gain control over the cryptocurrency including transactions- and the 51% attack is the most popular one as it has affected several cryptocurrencies with successful thefts of millions of dollars worth cryptocurrencies.

4. Attacks on Smart Contracts

The smart contracts are vulnerable due to the presence of bugs in the source code. Smart contracts are the automatic agreement between buyers and sellers that are simply written in source code. However, if a smart contract can be compromised through the bugs present, it can result in a great disaster and compromise the security of the entire transaction. 

As a successful attempt on Ethereum, a hacker planned a function that recursively requested the same entity from the smart contract and within a few hours, he successfully stole $50 million from the DAO– Decentralized Automation Organization that resulted in significant price drop in the value of Ethereum.

5. Attacks on Mining Pool

To gain more rewards, miners often tend to group their activities together and create a mining pool that togetherly earns more rewards by performing more transaction verifications without having to reduce accuracy. However, this opens gates for malicious miners to execute their attempts at minimizing the security of the system. Using methods like selfish attacks, Fork-after-withhold (FAW) these miners can easily steal the rewards from other miners. One such example of successful selfish attack ranges back in 2017 when the attack on the Eligius pool caused 300 bitcoin loss of other miners.

Conclusion

The attacks on blockchain systems are gaining more strength from the possible vulnerabilities of this technology. However, the continuous research and invention of newer methods to stop these attacks are also proving to be helpful. The growth of blockchain might get delayed because of the security vulnerability this system has and it gets highlighted much because of its direct connection with financial affairs.

However, the future development in the right direction of blockchain guarantees enhanced security measures implemented which can solve the problems persisting with the current system. Also, the prevention of these attacks requires user awareness and professional support to resolve the issues immediately and stop further damage.

Author Bio:

Deep is an aspiring entrepreneur and blogger having led 75+ startups on the right path with their information-admiring content. He crafts content on topics including on-demand services like uber clone, finances, technology trends and many more.