There is no question about the potential of blockchain technology. With each passing day more and more businesses and institutions are developing their own uses for blockchains. The future is bright, but there are still lingering concerns about the overall security of the technology. What are some common blockchain security loopholes? How can developers improve blockchain security? These are some questions that we will try to answer in this article.
Why Are Cryptocurrencies and Blockchains Vulnerable?
Those who use cryptocurrencies and blockchains are always quick to point out the overall security of crypto. They are correct to a degree. Digital tokens can offer a more secure method of exchange, and blockchains have the potential to make data more secure.
Critics of crypto are just as eager to point out that about $9 million is stolen from cryptocurrency wallets each day. That number may be up for debate, but all can agree that some cryptocurrency exchanges have been the victim of hacks and security breaches that cost investors a lot of money. The very best crypto exchanges are not immune to security breaches and hacks.
Some sources claim that at least $1.1 billion in crypto was stolen in 2018 alone. This begs an important question. Why do exchanges and cryptocurrency wallets become such frequent victims of a hack? The answer is that hackers are good at manipulating blockchain security loopholes. Those loopholes can belong to a device that is not properly secured, or they can be found in exchanges which haven’t taken proper precautions.
Human weakness is another big loophole in crypto and blockchain technology. It is far to easy for some people to fall victim to the social engineering of a hacker. Kevin Mitnick, one of the most famous hackers the world has ever know, used social engineering as one of his primary tools for getting access to restricted data. Blockchain hackers use the same principle to get wallet addresses and more.
Malware is commonly used to attack crypto wallets that individuals keep on their computers and other devices. It is a fact that many computer users rely on outdated antivirus and malware protection to secure their devices. Hackers, on the other hand, always stay up to date on their methods of attack. They create new malware about every four seconds on average. The virus programs can’t keep up. By the time they find a way to prevent or remove malware, another sinister application has taken its place.
Preventing Blockchain Security Loopholes
The situation isn’t hopeless. Far from it. Those who use cryptocurrency can avoid many problems by taking a proactive approach. They need to make sure the devices that they use to access their crypto wallets are secure.
Advanced methods of crypto wallet protection may include:
- Keystroke encryption
- Better password protection
- Anti-screen capture
The goal is to remain ahead of the hackers by creating better devices with improved security features. One such device that has been introduced in recent years is the hardware wallet. This device does not require cloud storage for the wallet. Everything is kept on a physical device that remains with the owner at all times.
The Problem with Private Blockchains
It would seem that private or permissioned blockchains are more vulnerable to security breaches than their open counterparts. The private blockchain has some inherent vulnerabilities that are difficult to overcome.
Here is a little refresher on blockchain technology and how blockchains work. A blockchain is basically a record or data or information that is shared among a group of individuals. The individuals with access to the blockchain can access the data, and they can also verify it or make changes to the record. A public blockchain allows anyone to participate in the maintenance of the network.
In contrast, a private blockchain only offers access to those who have the permission and authority to join the network. There can be multiple parties that are allowed access to a private blockchain, but all must have authorization to make changes to the record. Digital signatures are used to preserve the integrity of the blockchain.
There is an assumption that private blockchains are more secure because of the restricted access. The truth is that they are only as secure as those who have access to them. If an authorized user is using a device that is compromised by malware, the entire blockchain is at risk.
The way to prevent security loopholes in private blockchains is to explore both existing and new technologies. There must be methods for transaction verification in place. Some type of scan could also be useful, a scan that is used prior to data being added to the blockchain. Perhaps it is even possible to use a Dapp on the Ethereum platform to develop applications that would automate better security protocols.
There is great promise and potential in blockchain technology. That potential will never be filled until all of the blockchain security loopholes have been addressed. Thankfully, progressive development is taking place in the blockchain community. This development is sure to make blockchains more secure in the future.
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