Does Blockchain having security loopholes or not?

What is Blockchain?

In simple words, Blockchain can be described as an integration of the blocks that contain information about the transaction.

The blockchain is intended to timestamp digital documents so that it does not allow to compromising the data or tampering the data.

The purpose of blockchain is for secure data transfer without any third-party vendors like bank, payment gateway apps. Any modification to data processed inside a blockchain is very difficult.

There are blockchain security testing services to assess different aspects of the blockchain.

The below reasons will highlight the need for blockchain and its popular:

1. Decentralized System

A decentralized system provides users to accumulate features in a network that can be accessed via internet from anywhere. With a decentralized technology, blockchain transmit and receive the data.

Distributed Ledger

A blockchain provides a public ledger that shares the user’s information and accomplished digital transactions. The blocks captured are maintained completely and are then counted onto form a blockchain.

Promotes Safer and Secure Ecosystem

Blockchain has the capability to review and update itself on timely basis with its self- analyzing and revising process.

Mining

Mining deals ‘miner’ that solves a critical mathematical computation.

How does Blockchain works?

• Step-1: User requests a transaction, the transaction could contain sensitive information like payment details, personal details, etc.
• Step-2: The user requested transaction is broadcasted onto a Peer-to-Peer network and maintained by the nodes.
• Step-3: The network of nodes identifies and validates the transaction with the help of blockchain defined algorithms.
• Step-4: Once the user transaction is complete, the new block gets created on top of the existing block with unique hashcode and this way transaction details are secure or unalterable.

Few recent examples for Data breach involving Blockchain technology are as below:

• Critical RCE Flaw Discovered in Blockchain-Based EOS Smart Contract System (Source: The Hacker News)

Security researchers have discovered a series of new vulnerabilities in EOS blockchain platform, one of which could allow remote hackers to take complete control over the node servers running the critical blockchain-based applications.

EtherParty Breach: Another Ethereum ICO Gets Hacked (Source: The Hacker News)

Etherparty announced that its ICO (Initial Coin Offering) website selling tokens for a blockchain-based smart contract tool was hacked and the address for sending funds to buy tokens was replaced by a fraudulent address controlled by the hackers.

Hacker Uses A Simple Trick to Steal $7 Million Worth of Ethereum Within 3 Minutes (Source: The Hacker News)

The heist happened after an Israeli blockchain technology startup project for the trading of Ether, called CoinDash, launched an Initial Coin Offering (ICO), allowing investors to pay with Ethereum and send funds to token sale's smart contact address.

But within three minutes of the ICO launch, an unknown hacker stole more than $7 Million worth of Ether tokens by tricking CoinDash's investors into sending 43438.455 Ether to the wrong address owned by the attacker.

Vulnerable scenarios on Blockchain:

1. Node

• If a node on the network is attacked for instance like a distributed denial of service (DDoS), then the application hosted on blockchain gets affected.

2. Shared ledger

• Private key modifications

3. Smart Contracts

• Validate the methods for Smart Contracts
• Test all the APIs for the smart contract individually and then perform integration testing.
• Validation of encryption for the smart contract should be sent to another system via a distributed ledger.

1. Access and authentication
2. Secure hash, a consensus algorithm
3. Wallet signature method

Conclusion:

The blockchain technology greatly reduces the risk of malicious intervention, it‘s still not a panacea to all cyber-attacks. The above mentioned cyber-attacks brief us about the loopholes in the blockchain technology. The attackers using different exploitation techniques try to compromise the network resulting in users to lose the entire database.

Blockchain provides more security compared to other competitive technologies, however issues might arise in blockchain technology wherein which timely/regular software testing will be our Savior.

Stella is a Content Writer and Digital Marketing Analyst. She has written articles on software testing services, big data, analytics and latest trends in the tech world.