If there’s been one new piece of technology that has made more people excited over the last decade than anything else, it’s blockchain. The fact that blockchain could transact securely with a complete record of transactions undertaken was enough to welcome it with open arms. Blockchain has even redefined industries like eCommerce with faster and more secure payments and improved order fulfillment benefits.
Recently, though, the headlines have been painted with blockchain-related scams and illegal activities with one mishap following the other. The question that arises is whether the industry is ignoring high vulnerability risks and security gaps for the potential of high rewards.
We decided to investigate the matter by delving into the blockchain industry deeper to determine whether this feeling of invincibility when it comes to malicious cyberattacks is actually warranted or not. What happens when the industry lets its guards down? Read on to find out more.
Blockchain benefits: Potential use cases in cybersecurity
Before discussing the high vulnerability risks and security gaps that exist in the blockchain, let’s refresh our memory with the potential higher rewards that it can offer.
Secure transmission of data
Data has become ubiquitous today. It’s why data analytics is helping industries make accurate predictions about market trends and changes. Data is also what connects data science with blockchain. In fact, if data science is for prediction, blockchain is for data integrity.
There’s a reason why 80% of data professionals believe that blockchain will have the largest impact on the secure storage and transmission of data for the rest of the decade. Blockchain can protect data because of an innovative encryption feature that prevents any unauthorized access to data while in transit, eliminating the entry of malicious actors. And since many cybercriminals tap into data while it’s in transit, this benefit can be very useful to safeguard critical information.
Decentralized medium storage solutions
Businesses have tons of sensitive information about their customers, which is what makes them so attractive to malicious hackers. What makes matters worse is that most companies still use the centralized form of the storage medium. If the hacker succeeds in exploiting even a single vulnerable point, they’ll get immediate access to the bulk of the data.
But this can be overturned by companies that utilize blockchain. With blockchain, all data is then protected by a decentralized form of data storage, making it harder – or even impossible – for hackers to penetrate data storage systems.
Internet of Things (IoT) security
IoT is growing stronger than ever, with predictions that by 2025, there will be more than 75 billion IoT-connected devices in use, which is a nearly threefold increase from the IoT installed base in 2019.
Unfortunately IoT can pose a great risk to security, since hackers often gain entry to systems by exploiting weaknesses in everyday devices like routers, doorbells, security cameras, and so on. While there are definitely several other ways to protect your home network, you can consider using blockchain technology to protect devices from these attacks.
The co-founder of Trusted IoT Alliance, Joseph Pindar, commented that blockchain has the potential to give these IoT-connected devices “smarts“ to make reliable security decisions without having to rely on a central authority. This, in turn, will help to shut down any nodes within a given network that behave suspiciously or operate in a manner that’s not normal.
Protecting private messaging systems
One of the biggest perks of the internet is the fact that it’s broken down barriers, connecting people all over the globe. Social media, in particular, has become incredibly popular, with more social platforms being launched with every passing day. But despite their relevance as “conversational commerce,” these social media networks are collecting huge amounts of metadata whenever people interact with each other.
The problem here is that most people on social media use weak and unreliable passwords, and despite the ongoing debate of getting rid of passwords altogether, it’s still important to work on securing social media profiles. Blockchain fits into the picture as it provides end-to-end encryption, creating a standard security protocol. It helps form a unified API framework, too, that enables cross-messenger communication capabilities.
The hidden – and not-so-hidden – blockchain security vulnerabilities
There are several advantages and promising use cases of blockchain in the cybersecurity landscape no doubt. But there has to be a reason why only 4% of Americans prefer cryptocurrencies as a long-term investment, right? Even though most Americans are largely uneducated about what blockchain even is, which could explain why most people are afraid, there are legitimate reasons to be skeptical as well.
This is why we need to take a look at the hard facts. Blockchain’s integrity depends on its transaction validation methods and network governance models, but this also exposes it to certain integrity attacks. Some of these include:
Selfish data miners
It’s possible for a self-interested public blockchain miner to fool others into wasting time and computing power on already validated transactions. This may reduce the number of miners doing real mining work, making it easier to manipulate outcomes.
The eclipse attack possibility
Blockchain is based on communication across a wide network of nodes. Therefore, when these node communications are disrupted or disseminated, it may end up accepting false information that may result in the confirmation of fake transactions.
Centralization of miners (51% Attack)
Blockchain networks that increasingly rely on majority consensus for validating transactions become vulnerable if malicious hackers are successful in compromising a large group of its nodes. If cybercriminals, for instance, compromise public blockchain applications and acquire or gain control over at least 51% of its mining power, they will be able to manipulate the blockchain.
Of course, this scenario is highly unlikely in a robust system that consists of several users. Unfortunately, this isn’t the same for limited blockchain, especially one with small private implementations, leaving them considerably vulnerable.
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What we discussed above were potential scenarios for blockchain integrity attacks. But there’s also the possibility for coding errors since blockchain applications are computer systems at the end of the day.
Let’s discuss a few of them below:
Running on general-purpose operating systems and platforms makes blockchain applications subject to hardware and software vulnerabilities – even special-purpose blockchain platforms fall victim to this.
Organizations must employ critical computing resources and follow predetermined cybersecurity practices. While businesses are definitely doing their best to protect themselves against cyber attacks, we cannot ignore the likelihood of these vulnerabilities.
Unsurprisingly, whenever users interact with the blockchain system, it becomes the gateway for cyber attacks. It’s also why you should be aware of specific end-user vulnerabilities for organizations that use or are considering using blockchain applications.
● End-user attacks, such as identity theft, malware, phishing, etc
It’s common for malicious hackers to use general end-user attacks to accumulate user credentials or other sensitive data that allows them to infiltrate blockchain applications. The problem with such attacks is they not only damage private blockchain with lower security consensus mechanisms but can also be dangerous for the victim’s social image and finances.
● Unreliable passwords and device authentication
Digital wallet service providers rely on passwords and device authentication to minimize individual risks. In the end, they do involve human interaction, which makes these controls vulnerable unless the user’s organization takes due care. Although wallet control is a great example of a blockchain application, it’s still plagued by security issues.
● Privacy key management
It’s no secret that blockchain network integrity is highly dependent on encryption algorithms. If you analyze the latest blockchain-related cyberattacks, though, most of them have been successful because of cybercriminals stealing end-user keys and not attacking the network itself.
Individuals can lose or misplace their private keys, compromising their blockchain stored assets. Let’s also not forget that private keys are not reproducible by design, which is why end users need to be highly protective of the private keys they hold.
We aren’t debating the benefits of blockchain, but at the same time, we cannot ignore the vulnerabilities and cybersecurity gaps in the blockchain industry. Cybersecurity experts are designing ways to overcome these security gaps like the recent fully homomorphic encryption testing, but we still have a long way to go.
Thinking that just because cybersecurity increases transactional transparency and provides encryption for higher security is enough to protect you from cybercriminals would be unrealistic. What we need right now is to adopt a realistic view and work on improving the shortcomings of the blockchain industry, and once we’re successful in this, we can be sure of a brighter and more secure future.