Cryptocurrencies are based on blockchain technology, which comprises multiple security features, such as cryptography, software-mediated contracts, and identity controls. However, the rise in popularity of cryptocurrencies has encouraged threat actors to employ new strategies to target the underlying blockchain.
According to Atlas VPN, decentralized finance-related attacks constituted 76% of all major hacks in 2021, with over $1 billion lost in the third quarter alone. The third quarter of 2021 also had 20% more blockchain-based hacking incidents than in all of 2020, SlowMist reported.
Here are five factors that have created issues for the blockchain security landscape.
1. 51% attacks
51% of attacks involve the hacker being able to secure control of more than 50 percent of the hashing power. In 2018, three renowned cryptocurrency platforms experienced issues from 51% attacks. The three platforms were Ethereum Classic, Verge Currency, and ZenCash (now Horizen).
2. Susceptibilities at Blockchain Endpoints
Threat actors exploit every minor flaw, therefore it’s important to remember that most blockchain transactions have endpoints that are vulnerable. For example, the result of bitcoin trading or investment may be a large sum of bitcoin being deposited into a “hot wallet,” or virtual savings account. These wallet accounts may not be as hacker-proof as the actual blocks within the blockchain.
To facilitate blockchain transactions, several third-party vendors may be enlisted. Some examples include payment processors, smart contracts, and blockchain payment platforms. These third-party blockchain vendors often have comparatively weak security on their own apps and websites, which can leave the door open to hacking.
3. Regulation issues
Many advocates of blockchain believe that regulation will result in innovation delays. However, it is quite opposite because regulations and standards can indeed benefit security and innovation. The current market is suffering from high fragmentation, where different firms have their own rules and protocols. This means developers can't learn from the mistakes and vulnerabilities of others -- never mind the risk of low integration.
4. Lack of talented cybersecurity professionals
The current blockchain security space is suffering from a major skills shortage of cybersecurity professionals who have blockchain expertise or a tight hold on novel security risks of the emerging Web3 decentralized economy.
5. Phishing Attacks
Phishing is one of the most common methods employed by attackers. It is basically a scamming attempt to obtain the credentials of a user. Hackers send emails to wallet key owners by posing as an authentic, authoritative source.
How to mitigate such attacks?
The attacks can only be prevented by strengthening the security processes. And it comes at various levels. Here are a few tips recommended by experts to mitigate the risks in blockchain technology: -
- Two-factor authentication
- Ensuring proper wallet management
- Using different wallet addresses
- Keep off phishing links
- Regularly checking wallet approvals
