Blockchain is constantly reviewed by a network of users, which makes it difficult to hack. Darshan Bathija, co-founder of & Vauld CEO, said these attacks help hackers use a digital token more than once by duplicating the file. The decentralized nature of a blockchain means that its network is distributed across multiple computers known as nodes. This eliminates a single point of failure.
In other words, there is no way to “cut off the head of the snake because there is no head. However, as companies increasingly invest in blockchain technology, it has sparked the interest of cybercriminals who have successfully attacked various blockchains, posing a significant threat that causes researchers at the Monash Blockchain Technology Center (MBTC) to work hard on ways to increase security. of blockchain. The blockchain was designed to be secure.
Conceptually, the design of the blockchain makes it impervious to compromise. Each block, or record of data, is digitally signed with a “hash”, the result of a mathematical algorithm, which is based on the contents of the record and any other record on the blockchain. If any of the records are changed later, the calculated hash will no longer match the original hash and the change will be detected. These attacks are complex and based on the manipulation of well-established consensus mechanisms.
However, as the blockchain moves to other sensitive and commercially sensitive applications, similar attacks will surely continue. Researchers such as Dr. Jiangshan Yu, Associate Director (Research) of the MBTC and professor in the Department of Software Systems and Cybersecurity, are working to refine the trust structure of blockchain with developments such as RepuCoin, a proof-of-work cryptocurrency that is resistant to 51 percent attacks. while providing high transaction speeds of 10,000 transactions per second.
Looking ahead, legal professionals who encounter blockchain need to stay informed about risks and any new solutions. Since blockchain is supposed to be extremely secure and unalterable, many people have dubbed this technology “unhackable”. Another reason why it is even more difficult to hack a blockchain is that, in case the block being re-encoded is in the middle of the chain, the attacker would have to re-chop the old blocks to align their historical seal with the new block. The success of bitcoin drove the increase in legions of followers, including hundreds of new cryptocurrency launches and a wave of blockchain-based startups.
For example, miners can create a second version of the blockchain, known as a fork, where certain transactions are not reflected. Instead, it is usually a group of malicious actors or the main development team that collaborate to breach the security of a blockchain. By winning a majority over the computing power of digital currency, the hacker was able to defraud other users by sending them payments and then rewriting the existing blockchain ledger to cover their tracks, as explained by MIT Tech. Many different organizations, including those in the legal industry, use blockchain for various business functions.
This allows miners to create a completely different set of transactions at the fork and designate it as the true version of the blockchain, even though it is fraudulent. However, as blockchain platforms are strengthened through the increase in nodes or participants, the possibility of hacking a decentralized network is getting closer and closer to zero. Unfortunately, however, recent incidents have shown that hackers can access blockchains in certain situations. Phishing, malware, and key theft target exchanges and not the blockchain itself, as is the case with 51 percent attacks.
In fact, the same qualities that make blockchain technology so secure can also be the source of several unique vulnerabilities, a clear reminder that, despite the hype, cryptocurrencies cannot completely circumvent the vulnerabilities of any other banking system. .
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