The news articles and stories about people losing money via cyberattacks in blockchain smart contracts are not new anymore. We all know that hackers take advantage of vulnerabilities within the blockchain and specifically the smart contracts resulting in financial losses. The attack surfaces on blockchain become larger as the features available in blockchain applications increase.
Blockchain is transparent cryptographically authenticated technology that displays all digital transactional events on a public ledger which is nothing but a distributed database of records. Blockchain technology was initially developed with the objective to provide an alternative approach to recording transactions in a transparent way. With the technological progressions and advancements in web technologies, the scope and usability of blockchain technology in various other business applications is also extending.
Bitcoin was the first Blockchain cryptocurrency way back in 2009. Building upon this, the next innovation in blockchain was the Ethereum platform in 2015, for developing smart contracts which worked as the backbone of DeFi (decentralized finance). The Ethereum platform allowed developers to build and monetize applications on blockchains. It was a peer-to-peer network that recorded all public transactions on a decentralized network. To date, more than 3500 applications are built on Ethereum, and globally 2,00,000 smart contract developers are developing blockchain applications on this platform. With such growth in blockchain development over the Ethereum platform, saving smart contract data on the Ethereum platform is very expensive as well as it is not completely secured.
In 2021, Internet Computer Protocol (ICP) came into existence that runs on independent data centers into blockchain, and creates public cyberspace that would be tamper proof. Blockchain technology is coming up as an alternative to traditional IT development processes which would not depend on cloud services, middleware, web servers, DB services, and any other legacy IT requirement. Developers can create smart contracts on blockchains as canisters that will hold code data and software to execute programs on internet computers. Users can interact with blockchain services and will not require tokens to interact with other blockchain applications on ICP.
Blockchain technology works on distributed ledger technology (DLT) that records peer-to-peer transactions on the DApps. The transactional information stored on the blockchain is immutable. The biggest advantage of blockchain technology is the decentralization of information with data integrity.
Cyberattacks into a centralized system of data storage can give entry to ransomware, from where it can access all the networks of the centralized system. Even after remediation of vulnerability, we can not guarantee if it is patched and remediated permanently.
Wait, this does not mean that Blockchain being a decentralized application, is totally vulnerability-free technology. The potential vulnerabilities in blockchain technology depend on its type – Public or Private! Ethereum based public blockchain applications are open for all, with user anonymity, on the internet-connected computer networks.
These blockchain applications are exposed to Phishing attacks via email, by sending wallet keys with the authentic and legitimate appearance of information to get access inside the smart contract. Routing attacks is another way in which hackers can enter blockchain during data transfers, using IP prefixes or connectivity disruptions for a brief period. Another way for entering blockchain, used by hackers is Sybil attack, where a hacker creates false networks to crash the system and take advantage of the situation for vulnerability reentrance into the blockchain network. The cyber security specialist can recover the data of Sybil attack up to 50% by blockchain mining, but when the attacker crosses this scale the attack becomes irreparable and is called 51% attacks. Ethereum classic, ZenCash, and Verge had 51% attacks in 2018 and in this event millions of ethers were lost.
Blockchain technology is still evolving and with upcoming internet advancements, this technology will definitely become pervasive across industries. Automations for identifying these cyber insecurities and remediating them in real time are some of the most important measures that industries are taking to improve the cyber security concerns of blockchain application development. Vulnerability assessment and management applications such as BlockChainSentry that are scalable and compatible with future changes of web3 technology are going to help in the development and adaptation of blockchain technology and will become an integral part of this technological revolution.