Image Credit: CalvinAyre
Recent finding on several Blockchain Projects has suggested that due to the decrease in total market capitalization and cost of mining equipment of most cryptocurrencies, the cryptocurrencies have become susceptible to 51% attack.
On the other hand, isolated but notable incidents of glitch or incompetence in the code have also left the Blockchain vulnerable a couple of times.
Earlier this month, the company in charge of Zcash—a cryptocurrency that uses extremely complicated math to let users transact in private—revealed that it had secretly fixed a “subtle cryptographic flaw” that accidentally baked into the protocol.
In September, developers of Bitcoin’s primary client, called Bitcoin Core, had to scramble to fix a bug that could have let attackers mint more bitcoins than the system is supposed to allow. These vulnerabilities more often than not go unnoticed. Nevertheless, the 51% attack is the most detrimental and cannot be made a hundred percent protected.
Although it sounds simple in theory, renting enough mining power to attack a cryptocurrency would require much capital in the beginning. An attack on Bitcoin would cost than $260,000 per hour. However, it gets much cheaper quickly as you move down the list of the more than 1,500 cryptocurrencies out there.
During the market slump of 2018, various small market capped cryptocurrencies like VertCoin, Verge, MonaCoin, and Bitcoin Gold were caught up the 51% attack. The hackers siphoned a total of $20 million. The most infamous attacks of all were on Ethereum Classic (ETC) in which hackers got cryptocurrency worth $1 million.
A hacker had gained control of more than fifty percent of the hashing power on the network. The majority of Hashing power made it possible to spend the same cryptocurrency more than once, known as “double spends.” The malicious transactions were being validated by the hacker only — a little more than $1-million-dollars worth of ETC tokens unethically transferred during the attack.
David Vorick, the co-founder of the blockchain-based file storage platform Sia, predicted that 51% attacks will continue to grow in frequency and severity and that exchanges will take the brunt of the damage caused by double-spends.
Smart Surveillance and periodic auditing are the only ways to secure Blockchain and its Application against sudden attacks.
AnChain.ai is one of them; it applies Artificial Intelligence to monitor the ledger and flag any unusual activity. The protocol would also include testing of the smart contracts to find loopholes.
Tsankov’s ChainSecurity, are developing auditing services based on an established computer science technique called formal verification. Nevertheless, the process can be expensive and time-consuming, but it is necessary to deter malicious activity on the network. Events similar to Hackathon have also been hosted which rewards ‘bug bounties’ to individuals who identify the short-comings in a smart-contract or Blockchain applications.
Bitcoin was started with a simple idea of transferring and storing value without the need of Central Banks. However, a plethora of ‘tokens’ and Blockchain-based applications have flooded the FinTech Industry. Although the Blockchain is immutable by inheritance, the vulnerabilities introduced due to the overlying applications can be detrimental. Hence, they need to be addressed in the early stages of development.