With the rise of technology, blockchain also continues to ensure blockchain security. However, they are not as secure as we think they are. In the end, this is not enough to avoid blockchain security vulnerabilities. This is due to the improving tactics that hackers also come up with.
In this article, we will explore the security vulnerabilities of blockchain technology. We will also further discuss the methods of detecting cyber attacks and code vulnerabilities. This is to help you know and be aware of your data and financial transactions.
Most Common Cryptocurrency Attack Vectors
Knowing the problem is halfway through solving it. In this part, let’s learn about the most common crypto attacks. We can then learn how to minimize security issues.
1. Blockchain network attacks
Blockchain networks provide digital ledgers and smart contracts to the blockchain participants. Cyber attacks happen as hackers look for security vulnerabilities in these networks.
- Distributed denial of service attack
The attackers in distributed denial of service consume all the processing resources to bring down a server. Their main goal is to disconnect the mining pools and all other services of these financial institutions. They also want to wear out the network resources.
One of the most common signals that you will notice during this attack is when a site lags or becomes unavailable. This signal may be similar to usual network traffics so it’s better to investigate further.
It is critical to distinguish an attack from normal traffic to prevent attacks. Product launches, for example, result in usual traffic. As a result, cutting it off is not a good idea. On the other hand, when there is sudden traffic without reliable reason, you need to investigate to avoid potential security risks.
One of the most famous attacks is The Google Attack in 2020. Using several networks, the attacker stole approximately 167 MPPS (millions of packets per second) and 180,000 other exposed servers. It is four times larger than the attack from the Mirai botnet.
- Transaction malleability attacks
These attacks are designed to catch the target off guard and make them pay twice. Hackers modify the sender’s transaction ID. They then alter the network’s hash and check it before proceeding with the actual transaction. This will let the sender assume that the transaction has failed. When the user makes another transaction, their accounts will be debited twice for the same amount.
The known example of this attack is the first bitcoin exchange in the world. In 2014, Mt. Gox company fell to this attack. Their bookkeeping was messed up and users can withdraw more bitcoin than what they own. The issue was solved with the help of the Segregated Witness (SegWit) process.
- Timejacking
This attack alters networks. Hackers compromise blockchain security issues by changing the time counter. They also force the nodes in accepting another blockchain.
This benefits the attacker for a double-spending attack and transaction with the node. That is because these are not submitted to the blockchain network. This attack can be prevented by acceptance of time ranges restriction. Users can also use the system time of the node.
- Routing attacks
A routing attack relies more on large data transfers that are real-time. It affects the whole blockchain network and the individual nodes. In routing attacks, hackers tamper with transactions and the users can’t see the threat.
A routing attack has two separate divisions. One is the partitioning attack while the other one is the delay attack. The former separates the nodes into groups while the latter tampers with the messages.
- Sybil attacks
A Sybil attack arranges its attack by assigning identifiers. Blockchain networks send requests to many nodes. While a routing attack does not focus on the whole network, Sybil attacks do.
Attackers try to influence the network by flooding the network with fake identities. A single operator is behind all these node attacks and it makes them double spend.
- Eclipse attacks
These attacks in blockchain technology manipulate the ledger’s view. The attack involves the hacker’s control of IP addresses. The outgoing transactions of the user are then redirected to the manipulated IP addresses.
- Long-range attacks on proof of stake networks
In long-range attacks, hackers target networks that use Proof of Stake (PoS). This algorithm lets users mine and verify transactions. This is also according to the coins they currently hold.
Long-range security vulnerabilities have three types. These are simple, posterior corruption, and stake bleeding. Cybercriminals in these attacks usually steal private keys with enough tokens. These private keys must have been used for transactions. This can help the hacker to benefit from it and increase rewards.
2. User wallet attacks
Blockchain technology itself is maintaining its cyber security for data integrity. It is also to keep the crypto assets away from scam attempts. This is the main reason for risks in user credentials.
Scam attempts are now getting more alarming in the blockchain platform. Let’s now further discuss the most common wallet attacks.
- Phishing
Data breaches still use phishing attacks. Even with the innovative technology that blockchain network uses, many users still fall prey to these attacks.
In 2018, certain wallets suffered from a phishing attack. This was conducted through a fake seed generator and the attackers successfully collected logs. They also stole approximately $4 million from users’ wallets.
- Dictionary attacks
These attacks compromise blockchain security as the hacker breaks the user’s hash. This is through conducting a trial and error on hash values of predictable passwords. Attackers attempt to get extracted confidential data and credentials. This is through text to crypto hashes translation.
- Vulnerable signatures
A blockchain network uses algorithms to generate signatures. These signatures are where attackers are trying to find security vulnerabilities. They also generate a unique private key.
Bitcoin, for example, uses a certain crypto algorithm for a private key generation. However, its results are not enough, and there are still problems with cryptography.
- Flawed key generation
Key generation also has its security vulnerabilities. Hackers may be able to access the private keys in a blockchain network. In 2014, a hacker attacks Blockchain technology during an update of the codes.
The security vulnerabilities of crypto assets falling into the wrong hands is present. Though it was immediately fixed, the fact that there is a flaw is still put to mind.
3. Smart contract attacks
Smart contracts also show security vulnerabilities like in Ethereum smart contracts, EOS, and other blockchain applications. Blockchain technology is continuously working on the smart contract development of blockchain security. Teams have been working to analyze and avoid such vulnerabilities.
- Vulnerabilities in contract source code
Parties signing the contract are the ones that are at risk when the smart contracts’ source code is vulnerable. In 2016, a total of $80 million was compromised when they discovered bugs in Ethereum smart contracts. Reentrancy vulnerability poses a threat because smart contracts with untrusted functions can still obtain control.
- Vulnerabilities in virtual machines
The Ethereum Virtual Machine (EVM) executes smart contracts that are in the Ethereum blockchain. Immutable defects, the cryptocurrency lost in the transfer, bugs in access control, and short address attacks. These are some of the common EVM vulnerabilities.
Hackers also apply other methods to compromise smart contracts. This also leads the younger blockchain to improve their blockchain security.
4. Transaction verification mechanism attacks
Transactions in the blockchain network must be in agreement to have confirmation. It is important to verify transactions and this process takes time. This is where cyber-attacks happen.
- Double-spending
Some of the cyber attacks include double-spending attacks. This is common to exploit users by taking advantage of the delay in verification. They use attacks such as timejacking, Sybil attacks, and more.
- Finney attacks
These attacks happen when malicious miners enter the blockchain. The network invalidates a premined block. It happens when an identical transaction is released in the network before that block.
- Race attacks
Race attacks also generate two transactions. The first one is what the attacker sends to the victim to accept payment without transaction confirmation. At that same time, the attacker also sends another transaction. This sends the crypto assets to the attacker. It will result in the transaction of the user as invalid.
- Vector 76
This also has two separate attacks. Malicious miners create two nodes. One connects to the exchange node and the other is to peers in the network. The malicious miner then blocks the high-value transactions.
The miner then sends the low-value transaction to the main network. The malicious miner then has the high-value amount.
- Alternative history attack
This is also known as a blockchain reorganization attack. These attacks risk crypto assets. Malicious actors send transactions to a recipient while simultaneously mining an alternate fork that yields the same coins.
In 2020, Ethereum Classic was subject to this attack. One miner lost internet access while mining and a reorganization happens in the network.
- 51% or the majority of attacks
A majority attack is when there is at least 51% control in the hash rate of the network. Blockchain technology might not take this seriously but Verge, ZenCash, etc. suffer from these attacks. Cybercriminals can collect sufficient hash computing power and can exploit millions of dollars.
5. Mining pools attack
Miners sometimes prefer to go to mining pools as it offers a lot of benefits than single mining. Mining pools experience attacks as they can be a sweet target for cybercriminals. Malicious miners want control of the pools and they exploit vulnerabilities in the blockchain technology.
- Selfish mining
Selfish mining happens when miners increase their shares illegally which leads other miners to lose blocks. This is also known as block withholding. To prevent this from happening, miners should have a random assignment to various pools. Other security features blockchain offers are timestamps and block generation within an acceptable time.
This type of mining happens with all cryptocurrencies. It is also necessary to register trusted and credible miners. Furthermore, they should also use innovative technology to hide the distinction between full proof of work and proof of work.
- Fork after withholding
Fork after withholding (FAW) is like a variation of selfish mining. In this type, malicious actors hide winning blocks. This concept is further explained by Ujin Kwon and his other co-researchers.
Methods to Analyze Vulnerabilities
There are many security features blockchain offers for smart contracts. The following describes the methods to detect security vulnerabilities in the crypto market.
- Static Analysis
Static techniques scan the whole source code efficiently. This is why detecting blockchain security vulnerabilities are so successful. Its crypto detectors can also keep track of the software cycle’s early faults. Even without the execution of application domains, this is the case. As a result, researchers do not need to install such programs in order to evaluate the software.
These methods are also very scalable, allowing users to use them with a big base code. It also aids in the adaptation to various settings.
Different tactics, however, always have disadvantages. Because static tools focus on the source code, there are no users involved. This exposes consultancy businesses and the entertainment industry to security risks. Because of the elusiveness of static tools, they are used infrequently in the industry.
- Dynamic Analysis
Opposite to static analysis, these tools focus on actual execution. Developers can also choose direct interaction with the UI in dynamic analysis. False positives are also not frequent in these tools. Researchers can monitor the system more frequently in terms of its memory, behavioral function, and the general performance of the entire system.
For its disadvantages, these tools require more work. Expertise is also important to building and setting up the model and its environment. UI events can’t also deal with login information and when programs are stuck, developers must reinitiate the whole process. This process is generally time-consuming as we compare it to the ease of using static tools.
Conclusion
The cryptocurrency market experienced blockchain security issues. This proves that the market is progressive. Hackers know that they can earn a lot by exploiting security vulnerabilities.
There are so many threats and various kinds of attacks that cybercriminals have successfully done. They always find ways to attack and challenge blockchain security. Therefore, users must always be wary of the information they have in the network.
In the end, it is up to the user to know more about how they can ensure their security. You, as a user, must know how to detect these threats to effectively avoid and mitigate them.
