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Cybersecurity risks in the Blockchain industry

Blockchain is a shared ledger that regulates, facilitates and stores all transactions while tracking assets within a business network. In this article, our guest blogger Sophia Young, of Sophia Young Content Studio, takes an in-depth look into Blockchain.

It’s essential to know that an asset may be tangible or intangible. Common examples include:

  • Cars

  • Land

  • House

  • Patents

  • Branding

  • Copyrights

In a nutshell, assets are anything of value you can use to track and trade using blockchain technology for maximum protection.


Blockchain is an innovative idea that has directly impacted various industries worldwide, one of the most common industries being cryptocurrency.


But despite its high level of security, it still poses some cybersecurity risks that could negatively affect investors and businesspeople.


It’s a complex tool that remains anonymous, permanent, distributed, and widely viewed as a secure platform. But unfortunately, these qualities are also responsible for some of its most significant weaknesses. And as this particular technology begins gaining some traction, it’s incredibly crucial for users to be as cautious as possible before jumping into the bandwagon.

Cybersecurity Risks Associated With The Blockchain Industry


Whether you’re a newbie in crypto or you want to know more about blockchain’s safety, here are some of the most common digital security risks to look out for:


The Lack of Standardisation


With numerous organisations working on customised blockchain or DLT versions, it’s extremely difficult to have standardised rules and regulations across the platform. And because there’s a lack of standardisation within the entire industry, catastrophic cybersecurity consequences are at bay.


Moreover, the competition is exceptionally fierce, making it all the more difficult for these organisations to cooperate toward the primary goal. These standards are applicable to the entire blockchain ecosystem, such as cryptocurrencies, frameworks, Initial Coin Offerings (ICO), and more.


The Anonymity of Public and Private Keys


When it comes to accessing a blockchain, users are required to present their keys. An extensive combination of letters and numbers is nearly impossible to guess. And for additional security, all keys are anonymised, which means that nobody will ever know the identity of the key holder.


Although it is a vital security protection, it’s not like a safety deposit box where you can get a key replacement if you ever lose yours. The entire idea of blockchain heavily relies on public and private keys. So if you don’t have the correct combination, you won’t be allowed access to the digital content kept within the blockchain.


However, hackers are well aware of this fact and surely don’t want to waste their time guessing the proper combinations of these keys. So what they do is get access to the keys by attacking weak points within a user’s cybersecurity - it could be a laptop, tablet, computer, or mobile device. More often than not, it’s the user’s fault for not taking proper precautions for their public and private keys.


If you’re an Android user, they can easily install malware on your device without your knowledge. This will ultimately lead to hackers accessing all information on your phone.


So make sure never to store a copy of your private key in your notes app. And don’t be too confident because hackers could also get inside your laptop and computer. So be wary of phishing emails with malicious links as they often contain viruses. This is a standard risk across all coins, whether Ethereum or Bitcoin wallet.


Data Privacy Legislation


Data Privacy is probably one of the most prominent issues in the blockchain industry, alongside distributed ledger technology.


However, DLTs have been designed to play an essential role in the ongoing societal infrastructure. And with multiple countries and states implementing effective data privacy regulations, like the European Union General Data Protection Regulation, it’s essential to do the same for the blockchain industry.


Untested Code


The code’s quality remains a considerable concern for almost all available blockchain solutions. With this in mind, users within decentralised organisations need to take extra precautions when deploying their solutions.


For example, the Decentralised Autonomous Organization is one of the most famous hacking incidents in blockchain history. It was established in 2016, more commonly referred to as DAO.


After getting hacked, it lost a considerable amount of its revenue, ultimately damaging the entire organisation’s stability. The entirety of the split function was executed by the hacktivist who tried to transfer money from the organisation’s main account. Overall, he was able to steal $55,000,000 worth of Ether.


Conclusion


The blockchain industry was curated as a means to solve problems within various digital currencies. It’s an immutable copy of transactions that were linked with the use of digital cryptography and typically shared publicly across numerous computers around the whole globe.


It provides plenty of promise when it comes to improving both the security and accessibility of products and services from almost all industries.


However, certain risks go along with their potential benefits. And because blockchain was made to be publicly accessible and distributed, anyone can see the data embedded within it.


Despite having an anonymised wallet, other crucial transaction details are available for the public’s eye.


So before diving into the complex world of the blockchain industry, it would be best to do proper research and thoroughly understand the process it entails.



 

Reporting

Report all Fraud and Cybercrime to Action Fraud by calling 0300 123 2040 or online. Forward suspicious emails to report@phishing.gov.uk. Report SMS scams by forwarding the original message to 7726 (spells SPAM on the keypad).

 

The contents of blog posts on this website are provided for general information only and are not intended to replace specific professional advice relevant to your situation. The intention of East Midlands Cyber Resilience Centre (EMCRC) is to encourage cyber resilience by raising issues and disseminating information on the experiences and initiatives of others. Articles on the website cannot by their nature be comprehensive and may not reflect most recent legislation, practice, or application to your circumstances. EMCRC provides affordable services and Trusted Partners if you need specific support. For specific questions please contact us by email.

 

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