Many supporters of blockchain claim it to be secure against hacking; however, recent incidents have exposed several vulnerabilities within this technology. Are blockchains hackable though?
Blockchains are distributed databases that record transactions and ensure trust between participants on a network. Their cryptography and game theory ensure tampering with confirmed blocks is very costly.
Nodes are devices within a network that send, receive and communicate information between themselves and we need to talk about them to figure out if blockchains are hackable. Computers, scanners, routers, and any device connected to the internet all function as nodes in some way. Each node must possess an individual identification that allows other devices to recognize it and connect with it – this unique identification is known as its node address or media access control address (MAC address).
Blockchains are public ledgers that record and confirm transactions. Their decentralized design prevents hackers from corrupting the entire system while crypto transactions are protected with encryption technologies and consensus mechanisms, making blockchains far more secure than traditional financial systems and infrastructures.
Hackers would need 51% of nodes in a network to gain entry and alter a blockchain; even then, such an attempt would likely prove costly, as even minor modifications to one block could cascade throughout all copies of that blockchain.
Hackers could gain access to other users’ digital wallets without their knowledge by hijacking one or multiple nodes simultaneously – an attack that has occurred multiple times already. Furthermore, many popular crypto exchanges are third-party services that could easily be compromised as any centralized server could – this was how Bitcoin and other cryptocurrencies were stolen previously.
2. Cryptocurrency Exchanges
As cryptocurrency has become an integral part of everyday financial lives, many are curious if its blockchain processes can withstand attacks by malicious parties. While blockchain itself cannot be compromised, networks that host ownership blockchains for coins and tokens may be vulnerable to an array of attacks.
Hackers could, for instance, manipulate software used to generate blocks on the blockchain in order to add fraudulent records that robbed other members of the network of their rightful rewards and reduced its value.
Attackers may attempt to compromise a blockchain through misleading attacks by sending out malicious miners that siphon off computational power from legitimate miners – this practice is known as misleading mining and can be highly lucrative for attackers. Indeed, the recent Ethereum Heist was just such an instance – all cryptocurrency exchanges must prepare themselves against it as soon as possible.
Blockchain networks can also be vulnerable to “Direct Denial of Service” (DDoS) attacks, which send an overwhelming amount of transactions aimed at the network causing it to slow down or stop altogether. Most blockchain networks have established strategies for combatting these types of attacks, yet hackers still find ways to exploit smart contracts which are vulnerable to abuse from hackers with appropriate skill sets.
Blockchain is a digital ledger that records all cryptocurrency transactions, which is related to whether or not blockchains are hackable. Its immutability has long been touted as an attractive feature of investing in cryptocurrencies; however, many people remain uncertain whether its immutability can be compromised in any way.
Hackers could alter the Blockchain by seizing control of more than 51% of mining power in a network’s mining pool – this would allow them to rewrite or approve transactions without consulting other owners in the community. Unfortunately, such an attack would require considerable resources and funds that most hackers don’t possess.
Furthermore, the Blockchain is continually being reviewed by its entire community – this means any attempted hack attempt will quickly be squashed by these members of its audience – similar to bank vaults with security guards on duty around-the-clock that cannot be breached without proper warning and prior notice from other personnel – making sneak attacks nearly impossible.
Another method hackers could attempt to breach a Blockchain is by altering or deleting existing blocks with new data, potentially having severe consequences for its integrity and even leading to its collapse. However, such an attack would probably only be successful if it used Proof-of-Work technology; since these systems rely on algorithms for adding new blocks and any change would cause future blocks to reject it and thus render any change pointless.
4. Smart Contracts
Smart contracts are one of the cornerstones of blockchain technology, making legal professionals familiar with these digital agreements throughout their work – whether directly using them themselves, or through client issues and cases where these digital agreements were exposed. They utilize blockchain’s security and immutability to automate contracting activities and assist legal professionals when handling client matters.
Smart contracts may be widely popular, yet their creation still presents risks that lead to blockchains that are hackable. Like any programming language, smart contracts contain bugs that hackers can exploit. Most often these errors don’t manifest until exploited; as the blockchain industry expands so will hackers’ potential vulnerabilities.
While most bugs do not result in stolen funds, they still create disruption on the blockchain network and affect its price. This is particularly true of attacks designed to steal mining power from miners – known as 51% attacks.
An attack of this nature would require a malicious actor to simultaneously control and modify more than 51% of copies of the Blockchain, an extremely difficult and expensive feat that’s unlikely to go undetected by members of the network.