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9 Blockchain Security, Challenges and Examples

A company’s data is like oil, you cannot help but protect it.
Blockchain technology has grown in popularity in recent years. The distributed ledger system makes interparty communication and transactions effortless.
Since no system is free from errors and issues, many blockchain security issues have arisen over the years. Thus, It’s crucial to understand these challenges for the maximum safety of your data.
This article will highlight 9 potential blockchain security issues, the challenges, and their solutions.

9 Blockchain Security Issues

Before going into the details of each security issue, let’s understand the key differences between public and private blockchain security issues.

Public vs. private blockchain security

Public Blockchain networks are for anyone and everyone. Public blockchain networks are open and allow anyone to join the chain while following certain protocols.
Private Blockchains offer a secure environment requiring identity confirmation. Only known organizations with the credentials needed can access exclusive areas of a private network.

Blockchain Security Issues and Solutions

Blockchain provides unmatched efficiency for individuals and businesses. But as it scales up, potential security considerations threaten to put the brakes on its growth trajectory.
Here are 9 potential blockchain security issues that your need to know.

51% Attack: Single Malicious Actor Takes Over the System

Blockchain technology offers the potential for secure and efficient data storage. Still, the security of any such network is only as adequate as its weakest link.
Miners play an invaluable role in reinforcing blockchain security by using their computing power to validate Blockchain transactions, thereby preventing malicious attacks.
One of the most threatening issues to blockchain-based networks is a 51% attack, where a single malicious actor would have control over more than half of the Blockchain’s mining power.
Potential Damages
By gaining half of the mining power, bad actors can override the network’s consensus mechanism.
They can do malicious acts such as double-spending.
  • Transaction Denial Service: Attackers can modify the ordering of transactions, preventing transactions from being confirmed.
  • Mining Monopoly: Attackers can prevent miners from mining
  • This situation can be quickly remedied with enough miners continuously active on the Blockchain. 
  • Private blockchains are primarily protected against this attack since they require fewer miners. Thus, malicious actors are far less likely to attain majority control in these cases.
  • Improve mining pool monitoring. 

2: Phishing Attacks: the credential stealers

Despite individuals or company employees being the main targets of these attempts, it ultimately has repercussions across the entire network.
It appears that hackers have their sights set on stealing user credentials, entrapping them in cleverly-crafted emails containing fake hyperlinks they must click through and enter personal information.
Attackers masquerade as trusted entities. It can be someone you work with or any software you use.
  • Fake password change email: Attackers may send a fake email to change the password by using the given link, which is a fake login page. 
  • Your email account has been hacked: attackers may send you a fake alert to immediately take action. 
  • Payment request: This type of email can make it tough to recognize that it is a scam. Attackers use information relevant to your company and thus encourage you to take action.
  • Charity donations: scammers with a fake charity campaign may appear in your inbox and thus encourage you to donate using the given hyperlinks.
Acquiring this data gives fraudsters access to numerous other avenues that could lead to further harm.
  • Keep your system and software up to date. 
  • Improve browser security by installing a verified add-on to notify you about unsafe websites.
  • Do not click the hyperlinks before thoroughly reading the given details. Despite clicking a link, try entering the address in the browser. 
  • If you get any scam alerts, confirm with your partners before taking action. 
  • Improve device security by installing antivirus software.

3: Routing Attacks: Vulnerable attacks without users' knowledge

Blockchain security and privacy could be further jeopardized by routing attacks. Often, users are unaware of these threats as data is transmitted without any noticeable hindrance.
Blockchain participants are often unaware that they’re even being targeted. They let the operations proceed as they normally would, leaving them highly vulnerable to attack.
To effectively protect data from security breaches, it is important to implement
  • Secure routing protocols, 
  • Use data encryption and blockchain-based authentication methods
  • Change passwords regularly. 
  • Stay ahead of the game by understanding potential threats and security measures to protect your data.

4: Endpoint Vulnerabilities: Absence of end-to-end encryption in your system

Blockchain endpoints are like a welcome mat, announcing, “Hi hackers, come on in!” Blockchain users interact with the network through devices such as computers and phones. Any data transferred between those endpoints are vulnerable to maliciously-executed attacks.
Blockchain developers must take proper security measures, such as encrypting the communications going in and out of devices, if we want to adequately protect ourselves from cyber hacking attempts.
Blockchain security issues can creep up when keys are stored on a computer or mobile device as a text file, so the safest route is to
  • Avoid storing keys on a computer or mobile device as a text file.
  • Download and install reliable antivirus software on all your electronic devices. 
  • Check-in regularly to ensure that each connected device has the correct date and time and restricted access only by authorized personnel.

5: Sybil Attacks: Sybil identities to control systems

Brian Zill of Microsoft Research and John Douceur’s paper are the forces behind coining the term Sybil for this attack. Sybil, a 1973 book, was about a woman living with Dissociative Identity Disorder.
Unsurprisingly, attackers using the Sybil attack also exhibit similar traits. Through generating numerous fake network nodes, hackers acquire majority consensus on a Blockchain to disrupt its transactions.
  • Incorporate the most suitable consensus algorithms 
  • Keep track of other nodes’ activities and investigate those only forwarding blocks from one person.
Although, these algorithms cannot guarantee complete protection against such malicious attacks. But they certainly make it impossible for the hacker to execute them.

6: Scalability issues: Speed counts to scale up your data processing

As the number of nodes and transactions in a public Blockchain system (say, Bitcoin or Ethereum) increases, scalability issues arise.
Each node must execute a computationally intensive activity to authenticate each transaction individually, resulting in slower data processing once the Blockchain becomes overburdened with heavy traffic.

7: Private Keys: Solid keys are crucial for security

Blockchain security issues are a serious business, and one way to protect your funds is by having private solid keys. A weak private key can be easily guessed, which means all your money could be stolen in an instant.
Nobody wants to become a victim of a hacker’s guessing game, so it’s important to keep private keys secure and as complex as possible.

8: Selfish Mining Attacks: Take advantage at the expense of fellow miners’ hard work

The selfish miner’s approach to the Blockchain presents various security issues, especially when the secret chain is longer and becomes accepted as the main chain.
This attack occurs when miners strategically withhold discovered valid blocks from the main Blockchain to work on building a separate but secret chain.
When selfish miner chooses this route, they disregard all blocks created by other miners, granting themselves higher rewards.
This scavenger hunt-like behavior seeks to answer the age-old question: how low will miners go for a bit of extra profit?
This can be very dangerous, as it creates a trust issue between miners and weakens blockchain security.

9: Malicious Nodes: Adverse cyber security issue in the blockchain network

No matter how sophisticated security measures are in place. Once a hacker manages to join the network, they can cause significant disruption. They can initiate thousands of inaccurate transactions or attempt to reverse legitimate ones.
Amidst the promise of cutting-edge technology, the dark cloud of potential cybersecurity issues hangs over users of blockchain networks worldwide.

Final Words:

Though blockchain technology is still in its early stages, it’s crucial to be aware of the potential security issues that may arise. By understanding these challenges and their solutions, you can help ensure the maximum safety of your data.
In this article, we’ve highlighted 9 potential blockchain security issues and their corresponding solutions. So whether you’re considering implementing a public or private blockchain system for your company, keep these challenges in mind to help create a secure environment for your data.

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