Blockchain is a new application model of computer technology such as distributed data storage, point-to-point transmission, consensus mechanisms, and encryption algorithms. Blockchain is an important concept of Bitcoin and essentially a decentralized database. At the same time, as the underlying technology of Bitcoin, it is a series of data blocks associated with each other using cryptographic methods. The data block contains information about a batch of Bitcoin network transactions, which is used to verify the validity of its information (anti-counterfeiting) and generate the next block.
Blockchains are helpful, however, this technology can be detrimental to your business because of its own specific set of security issues. Here are the top 5 blockchain security issues seen in 2019:
1. 51% Attacks:
Transactions can be reversed and caused double-spends by gaining majority control of a blockchain’s hashrate via malicious entities. Some famous cryptocurrencies such as ZenCash, Verge, and Ethereum Classic were victims of 51% attacks in 2018. There was a loss of $20 million last year due to this blockchain security issue.
In order to prevent 51% attack, being vigilant of mining pools, using higher hashrate, and avoiding using Proof-of-Work (PoW) consensus mechanism can be the measures to take.
2. Exchange Hacks:
The cryptocurrency exchanges are very popular among hackers as they have large crypto holdings without sufficient security protection. Many Cryptocurrency exchanges platforms obsolete the decentralized benefits of blockchains because they are centralized innately. There was a loss of $900 million last year due to this blockchain security issue.
In order to prevent Exchange hacks, it is safer to store funds via hardware or paper wallet as it can utilize minimal online touchpoints to protect money away from malicious online hackers. In addition, decentralized exchange (DEX) is a good tool to use in regular trading because it helps on trading directly from cryptocurrency wallet.
3. Social Engineering:
it comes in many forms, but it is always to obtain your private keys, login information, or more directly, your cryptocurrency. Phishing is one of the most common forms of social engineering. Malicious actors imitate someone you trust in emails, messages, or social media accounts. There was a loss of $3 million last year due to this blockchain security issue.
In order to prevent social engineering attacks, it is necessary to make sure you never send anyone your login credentials or private keys. Besides, you should not trust some sounds too good as it is always the trap.
4. Software Flaws:
Any software using blockchain technology should go over code reviews, penetration testing, and smart contract audits in order to test the software and find out flaws. There was a loss of $24 million last year due to this blockchain security issue.
In order to prevent software flaws, it is necessary to check if it has been audited for any flaws or loopholes by a third party when you use any blockchain-based software. In addition, security protection in your own set is necessary, too.
Cryptojacking causes performance issues, increases electricity usage, and opens the door for other hostile code due to the unauthorized and unnoticeable takeover of computer. There was a loss of multi-millions last year due to this blockchain security issue.
In order to prevent malware attacks, being vigilant is very important. You should frequently check if you have any mysterious programs running through the task manager and run regular security checks to ensure that it hasn’t been injected with malware if you operate a website.
As an important breakthrough in independent innovation of core technology, the security risk problem of blockchain is regarded as a major shortcoming that currently restricts the healthy development of the industry. Frequent security incidents sound the alarm for the industry. Therefore, we need to expedite the exploration and establishment of a security guarantee system that adapts to the blockchain technology mechanism.
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