Step-by-Step Guide to Blockchain Security

We've seen many instances in recent years where blockchain solutions have been targeted with data theft and cyberattacks, making this technology vulnerable to cyberattacks even with its default strong security factor. Here are a few examples of recent blockchain cyberattacks:

 

• Decentralized Autonomous Organization (DAO), a venture capital firm, was the victim of a code exploitation attack in which it lost more than $60 million in Ether cryptocurrency.

 

• Due to stolen keys, Bitcoin worth $72 million was stolen from one of the largest cryptocurrency exchanges, Bitfinex.

 

• Another cryptocurrency exchange, Bithumb, was recently hacked, with the data of 30K users compromised and $870K in bitcoin stolen in a suspected insider attack. Let us attempt to comprehend Blockchain Security in detail 

 

What is Blockchain Security?

 

Blockchain technology has been in existence since 1991. The initial discovery of blockchain was limited to currency transactions, but in 2014, the latest developments and potential in other financial and inter-organizational transaction areas where new opportunities were explored were seen. And in the last few years, the adoption of Blockchain has increased dramatically across all industries for various use cases and deployments.

 

Organizations are now leveraging Blockchain technology to build blockchain-based solutions for their customers in areas such as distributed databases, digital transactions, cybersecurity, and healthcare. The primary advantage of using blockchain technology is that it ensures transaction security due to its cryptography, decentralization, and consensus principles.

 

Security is managed to keep some vital information safe from hackers and other unauthorized users. With the increasing reliance on Blockchain networks, Blockchain security has emerged as a top priority. Blockchain security is a risk management technique aimed at securing transactions and, by extension, the entire blockchain network. It is usually carried out with the assistance of cybersecurity, authorized services, and ethical users.

 

Blockchain technology generates a data structure with inherent security properties. It is founded on cryptography, decentralization, and consensus principles that ensure transaction trust. Most blockchains or distributed ledger technologies (DLT) structure data into blocks, with each block containing a transaction or set of transactions. Each new block in a cryptographic chain connects to all the blocks before it in such a way that it is nearly impossible to tamper with. A consensus mechanism validates and agrees on all transactions within the blocks, ensuring that each transaction is true and correct.

 

Also Read | How to use Blockchain in Publishing Industry in 2023?

 

Why is Blockchain Security Important?

 

While blockchain technology is promising, there is still much work to be done to ensure that blockchain security has evolved sufficiently to support wider adoption. While blockchain technology creates a tamper-proof transaction ledger, blockchain networks are vulnerable to cyberattacks and fraud. Those with malicious intent can exploit known vulnerabilities in blockchain security and have been successful in a variety of hacks and frauds over the years.

 

The significance of blockchain security cannot be overstated. Blockchain and security are important concepts because it is a distributed ledger technology that can be used to securely store and transfer data. Blockchain is frequently used to securely and tamper-proof store data, making it ideal for storing sensitive data.

 

Blockchain security is important because it aids in the protection of data and transactions stored on the blockchain. It also helps to ensure that the blockchain is not vulnerable to hacker attacks. Companies that use blockchain technology must therefore take blockchain security seriously. Several security measures, such as using multiple layers of security, encrypting data, and using digital signatures, can be implemented to improve security.

 

Blockchain, like many other innovations, began as a supporting technology for a specific disruptive product: Bitcoin. Blockchain's popularity has now spread across the cloud, making it a promising mitigation technology for cybersecurity in general.

 

Our information is stored and shared online in today's digital age. Almost all businesses and organizations conduct transactions and keep records digitally. This reliance on constantly evolving cloud storage technology and online data transfers has resulted in security flaws that routinely expose sensitive information to malicious actors. As a result, developing a dependable cybersecurity protocol capable of dealing with society's ever-changing approach to big data is critical.

 

Industries across the board are embracing new technologies aimed at improving data and network integrity, and blockchain security is currently leading the way. Blockchain provides numerous benefits to cybersecurity, but it is not without flaws.

 

Also Read | 4 Types of Blockchain

 

Examples of Blockchain Security

 

Here are a few examples of how businesses and organizations are addressing blockchain security.

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Examples of Blockchain Security

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1. Mobile coin:

 

This cryptocurrency company based in California is creating a secure, user-friendly cryptocurrency for businesses that cannot afford to implement ledger security measures on their own. The cryptocurrency used by Mobilecoin replaces third-party transaction vendors, with all transaction data encrypted on both ends. The app is compatible with Facebook Messenger, WhatsApp, and Signal.

 

2. Coinbase:

 

Another cryptocurrency company based in California. Coinbase is a digital currency exchange where you can buy and sell digital currency. Coinbase operates entirely on encryption and stores wallets and passwords in a secure database. To ensure cryptocurrency safety, employees must go through a thorough background check.

 

3. J.P. Morgan & Co.:

 

J.P. Morgan is the largest and most well-known financial institution in the United States. It has created Quorum, an enterprise-focused version of Ethereum that uses blockchain technology to process private transactions. J.P. Morgan employs smart contracts on their Quorum network to create transactions that are both transparent and cryptographically secure.

 

4. Lockheed Martin:

 

This defense contractor based in the United States is the first of its kind to implement blockchain security. Lockheed Martin and the cybersecurity firm Guardtime Federal are collaborating to implement blockchain cybersecurity protocols in engineering systems, software development, and supply chain risk management. The goal of Lockheed Martin is to use blockchain to secure every step of its weapon development systems.

 

5. Cisco:

 

This California-based tech behemoth believes that blockchain is ideal for the Internet of Things (IoT) because the inherent ledger technology eliminates single points of failure and encrypts vital private data. This concept is significant because the Internet of Things has been rapidly expanding. If blockchain technology becomes the preferred IoT network, its visibility, and use will increase. Of course, it is.

 

6. Hashed Health:

 

This healthcare innovation firm based in Tennessee wants to assist the healthcare industry in implementing blockchain technology. The company is divided into three divisions: Hashed Collective, Hashed Enterprise, and Hashed Labs, with each focusing on a different aspect of blockchain. Hashed Health has collaborated with several hospitals and healthcare organizations to create secure digital blockchain networks dedicated to patient information sharing and secure internal communication channels.

 

Challenges of Blockchain Security

 

Blockchain is not without flaws. There are methods for cybercriminals to exploit blockchain security flaws and cause significant damage. Here are some common methods for hackers to exploit blockchain technology.

 

• Attacks are routed. Blockchains rely on massive data transfers that occur in real-time. Hackers with ingenuity can intercept data on its way to ISPs (Internet Service Providers). Unfortunately, blockchain users are unaware of any issues.

 

• 51% of attacks are successful. Mining on large-scale public blockchains requires a massive amount of computing power. A group of unethical miners, on the other hand, can seize control of a ledger if they can pool enough resources to acquire more than 50% of a blockchain network's mining power. Private blockchains, on the other hand, are not vulnerable to 51% of attacks.

 

• Sybil launches an attack. Sybil's attacks, named after the book about multiple personality disorders, flood the target network with an overwhelming number of false identities, crashing the system.

 

• Phishing attempts. This old hacker trick also works with blockchain. Phishing is a scam in which cybercriminals send false but convincing-looking emails to wallet owners to obtain their credentials.

 

• Blockchain is transparent to all. Since blockchain is transparent, all transactions on the network are visible to everyone. This allows hackers to easily target specific users or groups.

 

End Note:

 

The entire point of using a blockchain is to allow people - especially people who don't trust one another - to share valuable data in a secure, tamperproof manner. This is because blockchains use sophisticated math and innovative software rules to store data, making it extremely difficult for attackers to manipulate. 

 

However, even the best-designed blockchain systems can fail when the fancy math and software rules collide with humans, who are skilled cheaters, in the real world, where things can get messy.

 

Understanding and managing blockchain network risks are central to blockchain security. When creating a private blockchain, make sure it's running on a secure, resilient infrastructure. Poorly chosen underlying technology for business needs and processes can expose data to security risks due to vulnerabilities.

 

Because blockchain is still a relatively new technology that is growing and improving daily, blockchain security challenges are evolving as well. CertiK is constantly developing new services to help combat these evolving challenges.

 

While blockchain security poses some risks, cyber security professionals can do a lot to mitigate these risks. Blockchain penetration testing is a security evaluation process carried out by ethical hackers or security professionals to test the security of a blockchain-based solution or application. 

 

The primary goal of blockchain penetration testing is to identify vulnerabilities and security flaws in the solution as well as misconfiguration errors. Organizations can gain insights into the overall security posture of their blockchain security by performing Blockchain penetration testing, which also allows them to address potential weaknesses in their blockchain-based solutions or applications.

 

Finally, Many people still don't understand what blockchain security is, which is a major concern for businesses and individuals who use or rely on blockchain technology. While blockchain's decentralized nature makes it inherently more secure than centralized systems, there are still potential security risks to consider. These include network-based attacks as well as malicious actors attempting to exploit system vulnerabilities. 

 

Businesses and individuals who use blockchain technology should ensure the security of their systems by thoroughly understanding blockchain and security, putting strong security measures in place, and staying up to date on the latest security threats.

Also Read | Role of Blockchain Technology in Secured Payments