Blockchain and cryptocurrencies are two of the hottest topics in the tech world today, and their popularity doesn’t seem to wane anytime soon. While you may be familiar with and invested in blockchain cryptocurrencies such as Bitcoin and Ethereum, you may be surprised at the seriousness of potential security threats to blockchain networks.
If you have ever invested in blockchain cryptocurrencies, or are planning to get involved in any form of blockchain network, you should be aware of the pitfalls of blockchain network security.
However, we never advise on investing in blockchain cryptocurrencies. It just draws attention to the often overlooked security issues facing blockchain networks.
Are blockchain networks prone to security threats?
Blockchain networks operate on core principles of decentralization, anonymity, and cryptography. What this essentially means is that there is not a single controlling entity that manages the database, but rather various nodes in the network that securely execute transactions over the network using a consensus protocol. is.
Like any technology, blockchain has drawbacks despite having a transparent and immutable digital ledger. There are many types of security threats to which blockchain networks are vulnerable. This could include cyberattacks that cause direct financial damage to the blockchain or defraud blockchain users.
What are the security risks of blockchain networks?
All blockchain networks (Bitcoin, Ethereum, Ripple, Cardano, etc.) are vulnerable to various security threats depending on how they are configured to operate. The threats listed below can apply to several different cryptocurrency networks.
1.Attack power 51%
Perhaps one of the most important characteristics of blockchain networks is that they are immutable. This means that once a record is created, it cannot (in theory at least) be modified or deleted. Blockchain networks are decentralized and rely on the consent of the majority of miners. Transactions that get 51% of the votes will be approved and added to the blockchain. 51% of votes equals 51% of the computational mining power of the blockchain network.
In an ideal world, we wouldn’t have to worry about malicious hacker groups controlling 51% of the blockchain. But what if it happened and they were aiming to bring economic chaos to the blockchain network?
In such a situation, a malicious hacker who currently controls at least 51% of mining power can execute fraudulent transactions, reverse existing transactions, double spending, and replace valid non-malicious transactions. may refuse to As you can imagine, this will definitely leave the blockchain vulnerable to economic damage.
Fortunately, the financial cost to acquire the massive mining power needed to successfully conduct a 51% attack on important blockchain networks such as Bitcoin and Ethereum is over $10 billion, and it has occurred. very unlikely to. However, small, relatively new blockchain networks with limited miners are particularly vulnerable to 51% of attacks.
Proof-of-stake networks such as Ethereum (ETH) and Cardano (ADA) require malicious groups to control not only 51% of mined hashes, but 51% of staked coins, thus 51% of attacks is even more difficult. ratio.
For a 51% attack to succeed on a blockchain network, a malicious group must first control 51% of the mining power. The intended modified blockchain must then be able to be inserted in a timely manner. You can vote to bring it back.
2. Routing attack
Unlike the 51% attack, routing attacks rely on exploiting vulnerabilities in the underlying Internet routing infrastructure. An attacker can use a routing attack to split the blockchain network into two separate networks for her. The attacker acts as a bridge between both partitions so that all network her traffic is routed through the attacker. This will force the creation of parallel blockchains, and when the attack is finally stopped, all blocks in smaller partitions will be discarded, transactions will be dumped, and mining rewards will be denied.
Similarly, routing attacks can be used to delay the delivery of mined blocks by at least 20 minutes, completely undetected by the Bitcoin network. This can lead to double spending and wasted mining power.
Routing attacks are theoretically possible by intercepting network traffic, hijacking the Border Gateway Protocol, or even intercepting network traffic received via an autonomous system. Bitcoin in particular is susceptible to partition-and-delay attacks through routing attacks.
3. Sybil Attack
A Sybil attack can be considered a type of 51% attack. These attacks typically involve attackers creating fake dummy nodes on the blockchain network. Using this, attackers can gain her 51% majority and execute malicious transactions on the blockchain.
Blockchains tend to adopt consensus protocols such as Proof of Stake (PoS) and Proof of Work (PoW) to reduce the likelihood of Sybil attacks. While these protocols do not completely stop Sybil attacks, it is very difficult as acquiring hardware to carry out large-scale Sybil attacks on PoW or PoS networks is expensive. will be
4. Blockchain User Endpoint Vulnerability
Blockchain networks, like other online transaction services, are susceptible to security duplication in user interface devices such as computers, tablets, and smartphones. An attacker trying to access a blockchain wallet may find the wallet’s private key by continuously monitoring your online activity or scanning your files with malware.
It is imperative that the private key of your crypto wallet is encrypted and not stored as a plain text file. Additionally, it is always recommended to install secure antivirus software that provides spyware protection.
Be careful in the crypto world
It’s easy to get excited about the idea of making a lot of money through cryptocurrency investments in Bitcoin and Ethereum, but be aware of potential blockchain security threats and how they affect your potential investments. You should be aware of it first. Always remember to invest safely, never share your private key with anyone on the internet, and avoid interacting with individuals who offer free crypto coins.