A Beginner's Guide To Blockchain Security Issues

Blockchain is a type of distributed ledger technology that can be used to create an immutable record for digital transactions. Blockchain has been touted as the key to reducing fraud and speeding up transaction times, but it also presents blockchain security issues. This post examines blockchain’s potential weaknesses in detail, so you know what you are dealing with when securing your system.

Working of Blockchain (Source: plug and play tech center)

Some Common Blockchain Security Issues

Blockchain security is important because it is, in its simplest form, a database. Blockchain networks constitute nodes that hold copies of the blockchain’s data and share it via peer-to-peer connections. Therefore, it is vital to learn about blockchain security issues.

Blockchain Credential Theft

A blockchain uses digital signatures to identify users with an address made up of a series of numbers and letters. Blockchain security risk arises because this identification method doesn’t take into account one important piece of information: your face. This can make it easy for someone else who has access to your login credentials either through hacking or social engineering (ie phishing ) attacks to gain control over transactions without being detected.

Credential theft presents serious risks, including unauthorized spending, money laundering, and even identity fraud. Blockchain security issues caused by credential theft can only be detected after the fact. So, it’s important to keep your digital identity as secure as possible at all times.

Blockchain Data Storage & Local Hacks

In addition to being a type of distributed ledger technology, a blockchain is also a form of data storage. In order to participate on the network, users must download an entire copy of the chain onto their devices. This represents another potential point where hackers could access your system and compromise its integrity from within. That is if they gain physical control over one or more nodes that are storing pieces of information necessary for consensus across all other points on the network.

Data storage vulnerabilities make it easy for attackers who manage to gain access and launch a successful data breach. It can make it easy for them to steal or manipulate information, including cryptocurrency tokens. You can mitigate these blockchain security issues by keeping your node up-to-date on the latest updates through automated processes.

Blockchain & Identity Fraud

New technologies often introduce new problems that need solving, and blockchain is no exception. Blockchain identity fraud occurs when someone else takes over control of your account credentials without authorization. After this, they perform transactions using another name, address, Social Security number (SSN), passport number, etc.

It creates digital signatures that prove ownership. However, cybercriminals manage to break into accounts represented only by random strings of characters can use stolen access credentials to impersonate legitimate users by substituting their own address in place of the original owner’s.

Identity fraud presents serious risks because it makes data theft and other kinds of crimes far easier for attackers. You can mitigate these blockchain security issues by implementing strong authentication measures that require two-factor authentication (2FA) when signing into blockchain applications.

Blockchain & Money Laundering

Criminals try to conceal or disguise the origins of illegally obtained funds so they appear as though they were earned legitimately through legal business activities or transactions. Criminals may attempt this through a variety of methods. For example, they use fake invoices to conceal the true nature of a transaction. They also transfer money from one account to another through intermediary accounts in order to anonymize their identities. Lastly, they cover up any links that might be traced back to them.

You can mitigate these blockchain security issues by implementing real-time transaction monitoring programs within blockchain networks. This enables you to monitor your transactions for suspicious activities and flag them immediately. You can check the penetration testing cost here by an external team.

Blockchain & Privacy Concerns

The last set of issues related to Blockchain technology is all about privacy concerns. In its current form, Blockchain doesn’t provide anonymity. Every user on the network maintains an address made up entirely of random strings of numbers and letters, with no personal data attached at all. This means you can easily use blockchain to track transactions and user activity, but not the individuals behind those activities.

You can mitigate these privacy-related blockchain security issues by implementing blockchain platforms that include private and public networks within a single platform. This way you get maximum control over your data access. You can also use tracking tools like Blockchain analytics software which makes it possible for you to monitor all activity across chain networks.

Conclusion

Blockchain is a technology that holds the promise of being able to store and process data in a secure, decentralized way. With this type of database system, it would be difficult if not impossible for someone with malicious intent to alter or destroy records without authorization. The security issues present within blockchain need to be addressed before it will become truly revolutionary as a storage medium.