What is Blockchain Security?

Blockchain is a list of blocks. Each block comprises information such as transactions and a unique hash to identify each block. It is a distributed, decentralized ledger that is widely becoming popular these days.

What is Blockchain Security?

Security is managed in order to protect some vital information so that hackers or other unauthorized users do not get access to it. With the increasing dependency on Blockchain networks, Blockchain security has become a prime concern. Blockchain security is a risk management technique that aims to secure transactions and hence the whole blockchain network. It is usually implemented with the help of cybersecurity, authorized services, and ethical users. 

Why Does Blockchain Require Security?

Blockchain is an immutable ledger with no involvement of third-party organization. It also uses cryptography to hide some details. So hackers find it almost impossible to tamper with the blocks. But there are some loopholes that allow the malicious users to perform malicious activities as blockchain networks are not immune to cyberattacks and fraud. Blockchain attacks are cyber attacks that can be done by outside malicious users as well as the users involved in the network.  Some of the attacks are as follows:

• Sybil Attack: Hackers try to increase the traffic in the network like Sybil Attack. In this, the malicious user floods the network with unnecessary packets to create traffic in the network.
• Eclipse Attack: Hackers try to make duplicates of the node. This is an eclipse attack. The user eclipses(hides) the original node and broadcasts the fake node that was created by the hacker.
• 51% Attack: Hackers try to control the network. They take control of 51% of the mining and this attack is known as 51%Attack.
• Finney Attack: In the Finney attack, the hacker hides the original block and broadcasts the fake block. The transaction is performed. After that transaction for the original block is performed. So a case of double expenditure happens.
• Attack Wallet: In this hackers try to attack users’ wallets to perform unnecessary transactions.

So security is of prime concern in blockchain as millions and millions of transactions are involved and these are the reasons why Blockchain networks should be secured.

Best Practices For Building Secure Blockchain Solutions

Companies are using many ways to make a smooth secured network for users. But users also have some responsibility so that the whole system gets secured. Some of the ways are: 

• Use of Cold Wallet: Cold Wallets do not connect to the Internet, therefore users can secure their private keys. The wallet is not prone to cyberattacks.
• Secure the Internet: Often hackers try to hack Wifi. Users must avoid public wifi networks at all costs as any hacker can use public networks and can use malware to steal valuable information.
• Avoid Phishing: Phishing attacks are common nowadays. Users should not click malicious advertisements. They should remove all the spam emails.
• Password: It is always advisable to use strong passwords with a combination of alphabets, numbers, and special characters. Passwords should be changed regularly.
• Security of personal devices: Personal devices should be up to date. The patches should be fixed and the latest antiviruses should be installed to protect from virus attacks.
• Blockchain Penetration Testing: Those who create blockchain networks should get penetration testing done by an ethical hacker to test the strength of the security blockchain networks and find vulnerabilities if present.
• Secure keys: Keys should be secured by the user. Strong cryptographic keys should be used Users should not share the keys with other users.
• Use private permissioned blockchain: Business entrepreneurs should use private permissioned blockchain. The permission is necessary as each user is verified before allowing them to enter the blockchain.

How Security Differs By Blockchain Types

There are two different types of Blockchain and security is totally different in these two types:

• Private Blockchain: It is also known as permissioned blockchain. It is centralized as the whole network is controlled by the network administrator. Anyone who wants to enter the blockchain requires permission from the network administrator. The transactions are private as only the members of the blockchain have access to it. Although it ensures more privacy, still it is more prone to hacks. The reason is that this network relies on third parties so data can be manipulated and the network is also small.
• Public Blockchain: This is also known as the open blockchain. Here no permission is required. Anybody can take part in the network. Data on a public blockchain are secure as it is immutable and the network is highly decentralized. This network is highly secured, but privacy is a huge concern. Anybody can read the transactions and all the users are not verified.

How Do Fraudsters Attack Blockchain Technology?

Although Blockchain is highly decentralized and we all know that decentralized networks are more transparent and secured. Still, there are some loopholes that hackers take advantage of. Some of them are:

• There are many blockchain attacks like Finney attack, Race attack, 51% attack, eclipse attack, Sybil attack, DDoS, routing attack, etc.
• They often flood the network with useless blocks.
• They often target specific users and try to attack their wallets.
• Some hardware is expensive, so hackers often target the hardware resources for their own selfish purposes.

Blockchain Security For The Enterprise

Blockchain has become really handy for entrepreneurs as they can perform transactions anytime, anywhere. It also allows a solution to rapidly size and scale, and many solutions can be adapted for multiple tasks. So security is also required in these cases:

• Each user should be verified before allowing them to access the blockchain.
• All transactions within the blocks are validated by business users and are agreed upon by a consensus mechanism.
• The blocks should be immutable so that once a transaction is done, it cannot be reverted.
•  Businessmen should use strong cryptographic keys.

Blockchain Security Challenges

As we all know, blockchain is highly decentralized and many security features have also been enhanced, still, it is becoming a challenge to apply the security rules.

• For a big blockchain network, it is impossible to verify each user. Checking each user’s identity is not possible as millions and millions of users are connected.
• Even if a centralized approach is used, the administrator might take control of the whole network. Then they can illegally perform mining for his /her own purposes.
• While blockchain is used for cryptocurrency traders, it’s increasingly being used in other fields as well. So testers often do not test the network properly, thus hackers can exploit the vulnerabilities.

Blockchain Security Examples

Many companies are giving prime focus on blockchain security as millions of users are dependent on blockchains. Some of them are:

• CoinBase: It is a California-based company. It secures the passwords and wallets in a secure database. It is run purely on encryption so that no hackers can have access to it.
• Javvy: It is a Georgian company that uses Artificial Intelligence to detect fraudulent activity. It also built a universal wallet to keep easy track of users’ money.
• JP Morgan: A famous US-based company. It uses blockchain technologies for private transactions. JP Morgan also developed Quorum for secured private transactions. It also uses the concept of cryptography in transactions.