Security Issues in Today’s Blockchain World

Blockchain is a technology that allows decentralization of data storage to take place so that no single central actor can alter the data. It is one of the most significant technological developments of this decade as it offers numerous benefits, including high levels of transparency, integrity, trust, and confidence to participants.

Blockchain is an exciting technology with the potential to impact many more fields in the future but is it secure? Many blockchain security issues have arisen in recent years because of improper technology implementation. As a result, the blockchain may become vulnerable, allowing attackers to engage in a variety of malicious activities. This causes delays in the chain's operation, transactions reversion on the blockchain, stealing users' private keys, and much more.?

It has been argued that blockchain and blockchain projects are secure, but simultaneous attacks in 2022 demolished this myth. According to blockchain data platform Chainalysis, over $1.6 billion in cryptocurrency has been stolen from users as of 2022.

In October 2022, the Binance exchange was hacked for $570 million which is one of the most high-profile attacks in cryptocurrency history. Hackers exploited a cross-chain bridge, BSC Token Hub, resulting in the creation of extra Binance Coins (BNB) and the withdrawal of 2 million BNB tokens.?

FTX, one of the most powerful players in the crypto industry, declared bankruptcy in November 2022. More than $600 million was stolen from its crypto wallets on the day it filed for Chapter 11 bankruptcy. Many FTX wallet users reported having no funds in their FTX.com and FTX US wallets.?

Other than this, the crypto world faced many other attacks including Ronin Network: $625 Million lost, Poly Network: $611 Million gone, Coincheck: $534 Million lost in the air, and many others in which users suffered significant losses.

So, despite blockchain’s immutable nature, it is vulnerable to cyber-attacks and security fraud. Here are some major security issues that the blockchain is facing nowadays:

First is the 51% attack, someone attains the majority in a network and abuses it. As we know miners play an important role in helping blockchain grow. If the hackers manage to obtain 51% or more of the mining power, they can become part of malicious activities. Having more than half of the power means you have control over the ledger and can manipulate it.

The second is the Sybil Attack, Sybil refers to a well-known book character who suffers from multiple identity disorders. In this case, an attacker creates multiple bogus network nodes. Using those nodes, the attacker can obtain the majority consensus and disrupt the chain's transactions. As a result, a large-scale Sybil attack is nothing more than a 51 percent attack.

The next major concern for blockchain technology's security is routing attacks. Blockchain networks and applications rely on massive amounts of data being transferred in real time. Hackers could easily intercept data as it was being transmitted to internet service providers.

Because everything appears normal, blockchain participants are unable to detect the threat of routing attacks. Routing attacks are commonly used to leak confidential data or extract monetary benefits while remaining undetected by network participants.

There is also a chance of double-spending attack, creating two transactions from the same unspent transaction. Digital assets are simple to replicate; after all, they are just bits of 1s and 0s. According to the rule, users usually wait for six blocks before getting confirmation of their coin or token received. So, hackers can easily perform double-spending attacks.

Phishing is a type of scam in which an attempt is made to obtain a user's credentials. Fraudsters send emails to wallet key owners that appear to be from a legitimate source. The emails use fake hyperlinks to request users' credentials. Having a user's credentials and other sensitive data can result in both the user and the blockchain network experiencing damage.

In the selfish mining attack, miners try to increase their rewards by keeping blocks private. An attacker takes advantage of his position and holds their crypto for a longer period to maximize profits. This strategy is risky. If one miner discovers the next block before the other and publishes it, all of his previous work would be rendered ineffective.

Another issue of blockchain security is vulnerable smart contracts. Smart contracts are written agreements and the blockchain keeps a record of the data. If these contracts are incorrectly or poorly coded and an attacker identifies the inefficiency, he will exploit the code.?

Private keys are very important in a blockchain, if the wrong person gets a hold of these they can access all the assets and transfer them as they please. People are more prone to private key security attacks than any other. If the private key is not strictly implemented i.e., if someone is using the same private key for different purposes hackers can easily guess it and access your private account.?

Another vulnerability that blockchain technology suffers from is transaction privacy leakage. On blockchain networks, user behavior can be tracked. As a result, blockchain systems must protect users' transaction confidentiality. In essence, users must allocate a private key to each transaction.

Blockchain is a revolutionary technology but it also suffers from security issues, some of which can be solved by proof of work or proof of stake consensus and others require a more advanced approach. As it is said, blockchain is as safe as its underlying code. As the network increases so does the chance of it being attacked by hackers. Security audits are very necessary to keep the blockchain secure and safe from hackers.