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Blockchain is an emerging technology benefiting businesses with its decentralized system, easy and safe money transfer abilities, and capability of storing and protecting financial information and sensitive consumer data.
Organizations like Intel, IBM, Microsoft, Google, Apple, Amazon, Walmart, and FedEx leverage blockchain technology to manage distributed databases, cybersecurity, and digital transactions, to develop efficient solutions for their users.
While this insane adoption of blockchain brings many benefits for global enterprises, it has attracted many cybercriminals as well looking to penetrate the technology and attack companies.
So, to mitigate threats and secure blockchain, organizations and individuals must start with a security mindset. In this post, we’ll cover a few threats, followed by some best practices to protect blockchain networks.
Threats to Blockchain Networks
Even though blockchain technology is seen as basically secure, it has the following vulnerabilities based on how they are configured to operate:
51% Attacks
Changes can be made to a blockchain if 51% of all nodes partaking in the chain say yes to an alteration. Malicious actors can conspire to form a 51% majority to commit harm.
A 51% attack involves an individual or organization collecting over half of the hash rate and halting control of the entire system. This allows hackers to carry out fraudulent transactions, reverse current transactions, double-spend, and reject any genuine transaction.
Sybil Attacks
Similar to the 51% attack, a Sybil attack involves an attacker generating numerous dummy accounts, nodes, or computers on the blockchain network. Using those nodes, the attackers can get the majority consensus and perform malicious transactions on the blockchain.
DDoS Attacks
Distributed denial of service (DDoS) attacks include many connected devices called botnets, which are used to inundate the target site or network with fake traffic. Attackers attempt to disconnect the blockchain network’s mining pools, wallets, and crypto exchanges by consuming its processing resources with many requests from online devices.
Routing Attacks
Routing attacks depend on exploiting basic internet routing infrastructure vulnerabilities. Attackers can use this type of attack to divide the blockchain network into separate networks.
An attacker works as a gateway between both partitions so that the entire traffic is sent through him. This, as a result, creates parallel blockchains, dumping the transactions and repudiating any mining rewards.
Phishing
Phishing attacks on blockchain networks continue to increase, leading to severe problems. It is a type of scam used to steal users’ login credentials, including crypto wallet keys.
Bad actors send emails containing fake hyperlinks, which, when opened, make the users and the blockchain network vulnerable to subsequent attacks.
Blockchain User Endpoint Vulnerabilities
The vulnerability of blockchain endpoints is another severe security concern in blockchain security. An endpoint is where users interact with the blockchain on user-interface devices, including computers, smartphones, and tablets. Hackers can notice user behavior and target devices to steal the user’s key.
Best Practices for Securing Blockchain Networks
Despite these risks and attacks, blockchain technology has the potential to be a secure and transparent means of conducting transactions. Below are some best practices to help protect the blockchain networks:
Implement Multi-factor Authentication (MFA)
Irrespective of the reliable registration process on a network with a private key, malicious actors still have loopholes to log in under the impression of an actual participant. To prevent this, you can implement multi-factor authentication (MFA), which will be linked either to the user’s device or the biometric data.
MFA offers an extra layer of security and helps with the prevention of unauthorized access to the blockchain network. It demands users to provide multiple forms of identification, which makes it more difficult for cyber attackers to access the blockchain network.
Audit Smart Contracts
Smart contracts are those that execute themselves, with the terms of the agreement written directly into code. Since they are a part of the code, they can have bugs or vulnerabilities that could be exploited by cyber attackers.
With smart contract auditing, it gets easier to prevent vulnerabilities. Several services and tools are available for auditing smart contracts. Furthermore, established security standards, such as ERC-20 and ERC-721, can help ensure that smart contracts are secure and adhere to best practices.
Store Cryptocurrencies through Cold Wallet Storage
Since prominent security incidents in the past few years targeted hot wallet applications on the web, cold storage is the optimum way of protecting crypto assets from thefts. A cold wallet, or a cold storage solution, is a way of holding cryptocurrency tokens offline and away from hackers.
This method removes the private key from the wallet, making it difficult for malicious actors to access the owner’s holdings through typical internet hacking means.
Perform Penetration Testing
Blockchain penetration testing is a security assessment procedure performed by ethical hackers or security experts at regular intervals to test the security strength of the blockchain-based application or solution. It is used to uncover vulnerabilities and security loopholes and pinpoint misconfiguration errors in the solution.
Through blockchain penetration testing, companies can acquire insights into the basic security position of their blockchain security, as well as allow them to fix potential weaknesses for their blockchain-based applications.
Use Transaction Endorsement
When it comes to blockchain, endorsement refers to the node in the chain that verifies transactions to determine whether they are legal or not.
Transaction endorsement guides the endorsement node to carry out the proper endorsement. This node uses the endorsement strategy to determine whether or not the transaction has been correctly endorsed. Transaction endorsement requires multiple parties to sign off on all transactions, which, basically, can help enhance the blockchain’s security.
Practice Strong Network Security
A range of measures can be used to protect blockchain networks from bad actors, data breaches, and other cyber threats. Zero-trust architecture (ZTA) is a framework that has gained a lot of interest in the real world since it can satisfy the latest standards for network security.
This security strategy views all users and devices as untrusted until they pass the verification process. As a result, organizations can protect themselves against sophisticated attacks.
Another smart approach is to use a secure virtual private network (VPN) for safeguarding the blockchain and cybersecurity environment. The VPN offers a protected and encrypted connection between two devices to send web traffic, which may be sourced from untrusted networks.
Moreover, a VPN hides a device’s actual IP address and geographic location, significantly enhancing overall online security. Several VPN options, such as NordVPN, Surfshark, and ExpressVPN, can be used to secure blockchain networks. Ultimately, choosing the right VPN is crucial for bolstering online security, particularly when it comes to protecting blockchain networks.
Final Words
Blockchain technology has the potential to transfigure digital transactions; however, it is not immune to cybersecurity threats and attacks.
By following the best practices outlined earlier, companies can ensure the security of their blockchain network and safeguard transactions from potential threats. Implementing the necessary steps can help professionals fortify the network and start reaping the advantages of secure blockchain transactions.
