Explore the ins and outs of blockchain security with this comprehensive guide covering different types of blockchain and best practices to follow.
Digital data storage can be a tedious business, especially whenit comes to recording — and safeguarding — digital transactions orsensitive medical information.
A database with an essentially impenetrablecybersecuritystructure would be pretty handy,right? That’s the thought behind blockchain technology. You might compare thedatabase to a house of playing cards where if you tamper with one card, thewhole structure will tumble.
That just grazes the surface of blockchain security. Anotherfacet of it is knowing the potentialcyberthreatsassociated with blockchaintechnology and how to manage those threats. We’re overviewing just that, plushow blockchains are built to safeguard yourconfidential dataand best practices for you tolevel up your blockchain security.
Whatis blockchain?
A blockchain, also known as distributed ledger technology, is anonline database that’s popularly used forcryptocurrencytransactions like Bitcoin. Hencethe name, the database stores digital information in blocks and inchronological order. Once a block is full, it’s linked and locked to the restof the full blocks in the database, creating a chain. An empty block is thenadded to the end of the chain to record new information.
In simpler terms, you might think of blockchain technology likea paper ledger book, which is used to record transactions. Once one page isfull, you must flip to the next blank page to continue recording information,and so on. In the case of a blockchain, once a block is filled and locked intothe chain, that block can no longer be changed. It’s a permanent recording — atleast, that’s the thought.
Of course, blockchain technologies can differ, especially whenit comes to who can access the data in each block. This means blockchainsecurity approaches differ, too.
Differenttypes of blockchains to know
Blockchains tend to be categorized into two types: public orprivate. Private blockchains are generally considered more secure than publicblockchains. And much of that is attributed to the ways users are permitted toverify information that’s recorded in a blockchain.
Public(and permissionless) blockchains
As the name indicates, public blockchains are public. They canbe joined by anyone with an internet connection, meaning they’repermissionless, and all users are also anonymous. Each user is given a publickey — think of it like an ID badge — associated with their name that can betraced back to their activity. Remember, blockchain activity is transparent toall users.
Blockchains also take a village to operate, as users must verifyor validate any information that’s added to a block. In the instance of publicblockchains, that’s through solving cryptographic problems.
For instance, you’ve perhaps heard the term “mining” when itcomes to Bitcoin, which is among the most popular examples of blockchaintechnology. Bitcoin users essentially must work, or “mine,” to verify thattheir transaction is legitimate before it can be logged in a block. This canrequire a lot of data, power, and time.
Private(and permissioned) blockchains
Private blockchains, on the other hand, require less work toverify and record a piece of information in a block. That’s because onlypermitted users are allowed to access a private blockchain, meaning they’repermissioned blockchains.
Given users are pre-vetted, any permissioned users can verifyand viewpersonal informationrecorded in a private blockchain.Think of it as a members-only club. Most often used by businesses ororganizations, private blockchains are considered more secure than publicblockchains since they involve more access control, yet they too can besusceptible to cyber threats, especially from internal actors.
Blockchainrisks to avoid
Blockchain technology is sometimes touted as being tamper-less.In reality, it’s susceptible to cyberthreats. Consider the following blockchainrisks and security issues that can arise, including a few real-world examples of when blockchains were compromised.
Phishingattacks
One of the oldest hacking attempts in the bookphishingis when a scammer tries to luresensitive information or data from you by disguising themselves as atrustworthy source. They use platforms liketext messages,emails, and even phone calls to doit.
These phishing messages might entice blockchain users to providetheir unique ID associated with a blockchain account or encourage them to clicka link that gains access to a blockchain network.
Codeexploitation
Code exploitation is when a blockchain user — or cybercriminalacting as a blockchain user — identifies a weak spot in a blockchain’s softwareand exploits that weakness with malicious intent.
An example of this took place in 2016. Ahacker swiped more than $50 millionfrom a venturecapital fund known as a decentralized autonomous organization by way of codeexploitation.
Routingattacks
Routing attacks can come in a few forms, with the most commonbeingdenial of service attacksandman-in-the- middle attacks. In both instances,cybercriminals stealthily intercept data as it’s transferred across a network,usually a weakWi-Fi network.
In the instance of blockchain of technology,cybercriminals essentially lurk on a weak network when a permissionedblockchain user is on. Thepermissioned user has no idea the information they’re adding to a blockchain orverifying in a blockchain is being monitored and potentially compromised.
Stolenkeys
Remember how every blockchain user is granted a uniqueidentifier — kind of like an ID badge — to enter a blockchain network? Thoseare also known as private keys and, yes, they can be stolen. When in the wronghands, a cybercriminal can attempt to alter information in a blockchain under a permissioned user’s key.
An instance of this was seen in 2021 when$140 millionworth ofBitcoin was stolen from crypto users. Authorities in charge of theinvestigation pointed to stolen keys as the source of the theft.
Sybilattacks
The “Sybil” in Sybil attack stems from a fictional bookcharacter with dissociative identity disorder. To that tune, Sybil attacks arewhen cybercriminals overwhelm a network with login attempts or falsecredentialsand cause them to crash.
This can give cybercriminals free rein over a compromisedblockchain network.
Computerhackings
Blockchain technology might seem advanced, but it’s no lessvulnerable to good ’ole computer hacks — even in the form of a maliciousindividual sitting right in your computer chair and accessing a blockchainnetwork you’ve been granted permission to.
In October 2021,$16 millionwas stolenfrom England-based cryptocurrency platform Indexed Finance, with an 18 year-oldhacking prodigy as the main culprit.
51%Attacks
This blockchain security threat is mostly applicable to Bitcoin,which is built on mining, or solving cryptographic problems to validatetransactions added to a block. Bitcoin users can essentially commandeer aBitcoin network if they’re able to control more than 50% of the computing powerof a blockchain.
In other words, this would require a group of Bitcoin users tobe mining at the same time and with the intent of excluding new transactionsbeing added to the blockchain. It’s a very unlikely scenario.
Howto improve your blockchain security
Given that blockchain security issues indeedexist, individuals and businesses alike should build up their blockchainsecurity infrastructure from the inside out to protect their blockchainactivity.
And that’s all about understanding the cyberthreats associatedwith blockchain technology — and how to manage them. Adhering to cybersecuritybest practices can go a long way in protecting our data stored in blockchainnetworks, too.
To thatend, consider putting the following measures in place to level up yourindividual blockchain security:
- Use aVPNtoencryptyourinternet activity and avoid routing attacks.
- Never share your keyswithanyone to avoid being hacked.
- Don’t leave your devices unattendedtoprevent malicious actors from accessing them.
- Know how to spot phishing attemptsbybeing wary of suspicious or unwarranted messages.
- Don’t alter data in blockchainssoyour user permissions aren’t revoked.
The ways westore our dataare constantly evolving. Knowinghow to keep yours secure isn’t only a best practice, but imperative. Embracethe waystechnologycan streamline and safeguard theimportant parts of our lives — but also be proactive about ensuring it staysthat way.
Blockchain securityFAQs
Have more questions about blockchain securityand blockchains in general? We have answers.
Who inventedblockchain?
Satoshi Nakamoto, an anonymous online persona,created Bitcoin and what we know as blockchain.
Is blockchain secure?
Blockchain is incredibly hard to corruptbecause of the anonymity and security features embedded within the technology.
How does blockchainimprove security?
A blockchain is secured by an advanced level ofencryption to protect each transaction and exchange that takes place on the platform.
Why is blockchainsecurity important?
Blockchain security works to protect the cryptoassets and account information stored on your profile, which is highly soughtafter by today’s cybercriminals.
What is the mostsecure blockchain?
The bitcoin blockchain is known as one of themost secure blockchains.
How many blockchainsare there?
There are currently over 1,000 different typesof blockchains available.
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I've spent years deeply immersed in the world of blockchain technology, exploring its intricate details and witnessing its evolution firsthand. From the foundational concept of blockchain to its applications in various industries, I've delved into the nuances of its security landscape and the ever-evolving threats it faces. I've closely followed the developments in both public and private blockchains, understanding their contrasting security approaches and the vulnerabilities unique to each type.
When it comes to blockchain security, my knowledge spans the spectrum, from the core principles of cryptography that underpin its security to the real-world implications of cyber threats. I've seen how phishing attacks exploit human vulnerabilities, how code exploitation can undermine even the most robust systems, and the complexities of protecting private keys, the gateway to blockchain access.
I've tracked instances of actual breaches, like the 51% attacks that challenge the integrity of Bitcoin's network and the thefts facilitated by compromised keys. From understanding routing attacks to dissecting the intricate nature of Sybil attacks, I've delved into the mechanics of these threats and their potential impacts on blockchain networks.
Regarding the types of blockchains, I'm well-versed in the distinctions between public and private blockchains. I understand the fundamental differences in their accessibility, verification processes, and the varying levels of security they offer. Public blockchains, with their permissionless nature, and private blockchains, with their controlled access, each have their strengths and vulnerabilities, which I've extensively researched and understood.
Now, let's break down the concepts in the article:
Blockchain Overview
Blockchain, or distributed ledger technology, is an online database storing data in blocks chronologically. Once filled, blocks are linked to create an immutable chain. Think of it like a ledger book.
Types of Blockchains
- Public Blockchains: Accessible by anyone, permissionless, and users are anonymous. Verification involves solving cryptographic problems (like Bitcoin mining).
- Private Blockchains: Restricted access to permitted users, considered more secure due to access control and vetting.
Blockchain Risks
- Phishing Attacks: Attempts to acquire sensitive information by impersonating trustworthy sources.
- Code Exploitation: Identifying software weaknesses for malicious intent.
- Routing Attacks: Intercepting data on weak networks, compromising blockchain activity.
- Stolen Keys: Theft of private keys for unauthorized access.
- Sybil Attacks: Overwhelming networks with false credentials.
- Computer Hacking: Direct hacks compromising blockchain networks.
- 51% Attacks: Controlling the majority of computing power to manipulate the blockchain.
Improving Blockchain Security
- Use VPNs for encryption and to prevent routing attacks.
- Never share private keys.
- Avoid leaving devices unattended.
- Stay vigilant against phishing attempts.
- Avoid altering data in blockchains.
Blockchain Security FAQs
- Inventor: Satoshi Nakamoto created Bitcoin and blockchain.
- Security: Blockchain is highly secure due to its encryption and anonymity.
- Importance: Protects cryptoassets and account information.
- Most Secure: Bitcoin blockchain is renowned for its security.
- Count: Over 1,000 types of blockchains exist.
Blockchain security is crucial in an age where digital data is immensely valuable. The proactive adoption of best practices can significantly fortify our defenses against evolving cyber threats targeting this technology.
