Blockchain technology has been a game-changer across industries but particularly in the financial and business sectors. It is due mainly to the added security benefits it provides, including the elimination of single-point failure and the use of cryptography, software-mediated contracts, and identity controls.
Despite these benefits, security threats are still a significant challenge in the blockchain market. As the network continues to proliferate and attract more interest from investors, so do the motives of malicious actors trying to exploit vulnerabilities for their gain.
Here are six challenges in the blockchain security landscape.
1. New blockchain exploit tactics
As new blockchain technologies emerge, so do new tools and methods for exploitation. Cybercriminals are always looking for new ways to benefit from a technology’s potential and blockchain is no exception. Recently, researchers have identified a new class of cyber threats involving tactics unique to blockchain networks.
These include ways of exploiting zero-day vulnerabilities, smart contract vulnerabilities, consensus algorithm vulnerabilities, and private key management vulnerabilities.
2. Old exploits, new platform
Malicious actors are also adapting tried-and-true cybersecurity attacks to exploit blockchains. This practice includes phishing attacks that use social engineering techniques to gain users’ credentials, install malware, and seize private keys and seed phrases. They also mount Sybil attacks using multiple fake nodes on the blockchain network to take control and conduct 51% attacks.
Distributed Denial of Service (DDoS) attacks are another significant challenge. Malicious actors can flood the network with spam transactions and cause operations to slow, preventing legitimate users from accessing it.
3. The human risk factor
Many blockchain attacks focus less on the technology itself and more on basic human vulnerabilities. Human error is a common entry point for malicious actors, such as those at the device, app, wallet, or third-party vendor level. Employees and vendor personnel are targets, too.
Misconfigured settings, erroneous data input, and developer incompetence, even without malicious intent, are other risks to be aware of.
4. Not all blockchains are equal
Blockchain architectures vary widely, especially when it comes to how different structures and components introduce security tradeoffs. Private versus public blockchains, for example, differ in whether known entities or unknown entities can join the network and participate in verification.
Different network configurations employ different components, which carry different security risks. Questions arise as to how consensus is achieved, identity verified and managed, and incentivized miners.
5. Lack of regulation
While regulation worries many blockchain advocates as it slows innovation, regulations and standards can indeed benefit security and innovation. The current market is suffering from high fragmentation, where different companies, consortia, and products operate using different rules and protocols. This means developers cannot learn from the mistakes and vulnerabilities of others, never mind risks of low integration.
A lack of regulatory framework slows adoption and enables cybercriminals to thrive. From money laundering to counterfeit and privacy to scams, an unclear regulatory environment exposes the blockchain network to multiple security breaches.
6. Cybersecurity talent crisis
The current cybersecurity landscape suffers from a severe skills shortage. This challenge is more severe in the blockchain security space because even fewer cybersecurity professionals have blockchain expertise or grasp novel security risks of the emerging Web3 decentralized economy.
Blockchain security requires experts who understand the intricacies of the technology and are up to date on the latest attack vectors. Untrained or inexperienced people can pose significant risks to the network.
Conclusion
The number of blockchain security threats will continue to rise as the network becomes more widespread. There is a need for education and awareness around these challenges to mitigate the risks.
Businesses should invest in security solutions to safeguard their networks and implement strict security protocols to curb cyber threats. Blockchain tech providers, on the other hand, should prioritize security in their products to minimize vulnerabilities that could be exploited by bad actors.
While there is no such thing as complete security in the digital world, blockchain’s inherent security benefits can be leveraged through best practices in security solutions and standards to bring the much-needed security assurance to the blockchain ecosystem.