Blockchain’s Vulnerabilities and Its Security Solutions

Blockchain technology, one of the popular industry 4.0 technology is promising in secure digital transactions. The benefits are being realized in many industrial verticals like healthcare, financial services, insurance, energy, logistics, healthcare, and the Internet of Things.

Despite blockchain technology offers cryptography advantages like hashing, digital signature, and immutability, it is prone to critical cybersecurity threats and vulnerabilities. The attacks lead to a loss of economy and trust.

To mention a few instances, they include –

  • Argentina’s official gazette website got hacked to spread fake news about coronavirus. The government declared that direct attack was not possible though there were attempts. However, indirect attack through the fake news link let the ‘Boletin official’ (official gazette) out of service owing to the massive demand for entry.
  • North Korean hackers stole around $300 million from four virtual currency exchanges, the United States authorities alleged.
  • According to a publication from ResearchGate, the impact of the cybersecurity incidents between 2011 and 2019 was more than $3 billion. The highest loss relates to hacking ($1.6 billion), scam ($1.1 billion), and smart contract flaws ($289 million).
  • An attacker stole Bitcoins equal to $450 million and from Mt Gox, which led to Mt Gox’s collapse.
  • In another example, the hacker managed to steal Ethers worth $60 million from the DAO, a smart contract in Ethereum blockchain.
  • A hacker gained control over Ethereum Classic (ETC), a cryptocurrency people can buy and sell on Coinbase’s popular exchange platform. The hacker stole $1.1 million by using the network’s computing power to rewrite the transaction history.

Akamai’s report predicts that more weaponized attacks may occur in 2020. Blockchain as a database is secure, whereas as a service it is vulnerable to attacks. Though blockchain is considered secure, there are certain vulnerabilities. Let’s understand those vulnerabilities here.

Blockchain security vulnerabilities

A few of them are as briefed here.

Clients’ vulnerabilities:

The vulnerabilities are related to human interactions. Blockchain connections are not limited to one person and the transactions will not require disclosure of participant identities. This leads to vulnerabilities like –

  • Digital Signature
  • Hash Function
  • Mining Malware
  • Software’s Flaw
  • Addresses Vulnerability

Endpoint vulnerabilities

The vulnerability emerges during the data input and output by Blockchain engineers while developing blockchain applications or human intervention during the trading of cryptocurrencies. An improperly tested blockchain application becomes susceptible to attack(s).

Consensus mechanism vulnerabilities

The vulnerability occurs in Blocks requiring an efficient and secure consensus algorithm. It includes –

  • 51% vulnerability
  • Alternative history attack
  • Finery attack

Mining pool vulnerabilities

Mining pool track activities of each miner using shares. At this juncture, attackers apply varied tactics to gain more shares and receive a greater portion of the reward. The common issues include–

  • Bribery attack
  • Block withholding attack

Network vulnerabilities

The attackers disrupt the normal operation of a blockchain network. The attacker here alters the transaction identifier (TXID) without transaction cancellation facilitating the adversary to withdraw continuously. The common recorded blockchain network attack is Transaction Malleability Attack.

Smart contract vulnerabilities

A few of the smart contract vulnerabilities include Ethereum Virtual Machine Bytecode and Solidity vulnerabilities.

Vulnerability in private key security

When a user loses the private key, it cannot be recovered. In case the private key gets stolen by cybercriminals, the users’ blockchain account gets tampered and it is difficult to track the criminal’s behavior. The modified blockchain information cannot be recovered.

With these possible sources of blockchain vulnerabilities, let us get into the solutions for these possible attacks.

Blockchain security solutions

The blockchain industry is growing at a faster rate with new methodologies and solutions tightening the security baselines. Some of the security solutions are briefed here.

  • Anchain’s smart contract audit platform scans vulnerabilities and threats with AI-powered solutions for code, infrastructure, and transaction analysis
  • Blockchain design should be domain-specific
  • As blockchain applications are vulnerable to insider threats, access to critical data should get restricted to those who handle them consistently
  • Use of hardware security modules can counter threats from attackers
  • The number of verification stages should get increased to ensure transaction validity
  • The cryptography key distribution must be done securely
  • Access control, data, and network traffic must be kept at different locations

Wrapping up:

The blockchain industry is popping up at a greater speed owing to its security features. However, they are vulnerable under certain conditions. It is crucial to use the technology at its best with actionable solutions. Many companies are researching the technology further to exploit the potential for a larger benefit with lessened vulnerabilities.


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