Cybersecurity & The Vulnerabiliites of Blockchain Technology

Generally speaking, when a blockchain network is run, each user functions under a specific node that consists of salt, identified by a hash number, and connected by the previous user before it. It can be thought of as a branch of networks, each individually following each other in the management of data resources that can work at specific speeds. Generally speaking, a general transaction between two parties can work up to a speed of 7 transactions per second, but thanks to applications such as IOTA everything can be interconnected in an open-sourced data within a multi-sourced validation system that’s open to the public.

The general message to see here, is that in the midst of developers and engineers establishing a certain speed to the general performance of transactions, security disruptions especially by third parties that hold a certain level of familiarity with the network structure will rely on the vulnerabilities of the nodes in order to extract a large amount of personal data, at a large scale. This is where the Enebus attack takes place, a method for hackers to invade networks on the blockchain exchanging transactions either through an IOTA format or normally, in order to perform 51% attacks that can cripple portfolios of those managing their money in the system.

For some context, the term salt means a random storage of data secured through the access of data, and is especially existent through hot storage that a person access by the use of blockchain wallets. You may read more about this in our previous articles, but considering our discussion is reliant on security atacks, the 51% vulnerability is essentially a step in which hackers enter a pool of transactional nodes within the network responsible for verifying an exchange in cryptocurrencies or digital assets, and assume control over 51% of the ongoing processes. Generally speaking, the verificiation of the currencies and assets within the network is called blockchain mining, and is generally the term hackers want to hear when seeking the extraction of data at a bolstering speed that invades protection of valued identifications at a high rate.

Now, since the alternative to using a hot storage to access personal information within blockchain wallets can be varied depending on the activitiy you’re involved in, cold storage methods are more or less recommended since ISPs will not be required to access the same level of information. Generally speaking, despite the way the network is built under a decentralized format for the freedom of the user, cold storages branch to various solutions that uphold value for those who are simply seeking to perform day-to- day purchases and investments. Some of the branches of cold storage access methods are L2s (Layer 2 Solutions) as well as sidechains. Since the speed and scale of transactions is what attracts the hackers to perform the 51% attack, cold storage security solutions works like layers to an onion. You have Layer-1 which is the main blockchain system itself, where Layer-2 serves as a way to increase higher transaction output by creating a third-party protocol that reduces the cost of making the exchanges as well as enhances speed. Because nodes are essentially functioning under hash numbers with security addresses, a set of them within an IOTA smart contract protocol work under the L2 layer solution as it’s on-chain, which mentioned from before in our first article, is essentially a set of transactions that take place within the blockchain.

A lot of the terms mentioned here, off-chain or on-chain, work under the main network whereas a separate chain may exist, called the sidechain. The sidechain works in parallel to the core of the onion so to speak, as it’s an extra strain of the blockchain that serves as an offline way for digital assets to be exchanged. As of right now, offline storages are the best way to combat the 51% attacks, but since hackers are clever with finding alternative loop holes and methods considering that the security behind the technology is still in the development stage, algorithms in the blockchain network vulnerable to the security intrusion can be susceptibl to Sybil attacks as well. As we’ll eventually go over the protection against identity fraud in further workshops with the help of applications, a preview into the ongoing problems is through the Sybil attacks, where a hacker may create numerous fake identities on the network that can be easily forgone if not carefully seen by the party interacting with them for a transaction. Generally speaking, these hackers find a way to take advantage of the hot storage access to networks by making use of invalid private keys and falsely tampering with them so that the identity is created. This is usually done so when other users do not make use of two-factor authentication in order to protect their personal credentials, and therefore either have their L1 or L2 addresses misconstrued with other users, creating a third-party mixup that can disrupt the speed of numerous exchanges taking place.

Now you might be wondering, how can someone’s personal information get into a third-party mixup with other hackers? To simply put, because the verifications of exchanges in the network rely on smart contracts, a simple flaw in the coding next to the lack of having 2FA over your accounts can create irreversible intrusions that will help the hacker establish control over your network. Though, in the opposite direction, if a smart contract is fully secured without defects in the code, it is simply unbreachable by the hacker. Either way, enabling two-factor authentification, will not only prevent long- term attacks but also help you privately secure transactions while smoothly keeping tracking of how your data is managed.

Next to the surface level attacks that can happen at any point in a busy network of blockchain transactions, some of the minor ones that are also figured to be equally damageable towards how users manage their portfolios is the short address attack and race attack. To put it into Layman’s terms, the short address attack is specifically notable in how Ethereum is exchanged under the ERC-20 standard, at which a hacker is capable of manipulating the data behind a smart contract within the Ethereum network in order to make it include data than was sent. On average, the term ‘short address’ in this special instance implies that the address behind the smart contract is shortened so that instead of a 20 byte-long string of numbers, it is shortened in order for the intruder to receive or send more ETH tokens than usual. It is essentially a form of deceptive hacking within the ERC-20 mainframe, which must be taken note of when managing such a vastly used cryptocurrencies. Similar to this, the other instance is the race attack, which expands beyond ETH but returns to the disruption of smart contract security in a busy onchain network. To simply put, in a race attack, a hacker with multiple computing systems can create two transactions at the same time for each user in the network by establishing the initial exchange between a digital asset and the payment for it, where multiple users will accept the same payment for their property without a proper confirmation, leading to the hacker receiving the asset and their initial payment as the exchange was not verified. The major reason for this attack, is simply because one of the parties in the exchange does not await confirmation for the payment, creating theft of property that cannot always be combatted through minting since once the attack has happened, the hacker may have a fake identity that will make them uneasy to track down.

By now, within a large or small scale, you have learned the major tweaks that a hacker can perform towards a network in order to merit from the existing loopholes that those on the opposite side of the transaction simply become a victim to experiencing. One of the core reasons as to why this is an ongoing issues that hasn’t exactly established on a core solution, is that enough security habits are not demonstrated for users to keep in mind of when investing their own personal finances into the technology for a possible return. Next to awaiting confirmation when a security intrusion takes place, enabling two-factor authentication, the deeper issues involve a lack of communication and trust, a problem with application development that can range between hundreds if not thousands of developers largely involving code defects, and last but not least the early stage of smart contracts crossing paths in an on-chain or off-chain set of nodes.

If you read our previous article on the contribution of blockchain technology to various industries such as music, applications such as Audius avoid the aforementioned errors by creating a space for users to purchase their private cryptocurrency, allowing them to take full control over a specific node in order to secure smart contract exchanges, which is a method effective in preventing 51% attacks by hackers, as the user assumes decentralized governance over a part of the crypto-based set of nodes rather than entirely relying on third-party sources that may not always be effective especially with the state of how an L1 or L2 address can be tampered with by any security intruder. Altogether, as this doesn’t just apply to the Web 3.0 space but Web 2.0 as well, always be sure to set the right authentications towards your accounts, and maintain a certain level of awareness over the businesses you trust your data with, as not all of them can be trusted which can be partially exemplified by our article covering the downfall of Silicon Valley Bank.